* Crude heads back towards one-year high
* Oil rise lifts key euro zone inflation gauge
* Euro zone stocks bruised by weak earnings
* Wall Street set to open a touch higher
* Graphic: sterling year-to-date tmsnrt.rs/2egbfVh
By John Geddie
LONDON, Oct 19 (Reuters) - The U.S. dollar fell from a seven-month peak on Wednesday, combining with signs of an easing supply glut to help lift oil prices back towards a one-year high.
A weaker dollar boosts crude prices, which gained over 1 percent to top $52 a barrel, since it makes fuel cheaper for countries using other currencies.
The bounce in oil pushed a key market gauge of long-term euro zone inflation expectations to a multi-month high, keeping bond yields elevated above record lows seen in the wake of Britain's vote in June to leave the European Union.
Wall Street was set to open a touch higher but neither the rise in commodity prices nor a barrage of data confirming China's economy, the world's second largest, was stabilising could prevent a dip in euro zone stocks after a series of poor earnings results.
"Oil is a good indicator of expectations for growth next year," said Frederik Ducrozet, a senior European economist at Swiss wealth manager Pictet. "It is comforting for markets that oil is above $50 a barrel and looking stable at those levels."
Against a basket of major currencies, the U.S. dollar fell 0.2 percent to 97.665, off Monday's seven-month high of 98.169, after consumer price data showed underlying inflation had moderated. That prompted markets to trim bets on a Federal Reserve rate hike later this year.
Traders said that had helped lift oil, which was also supported by a report of a drop in U.S. inventories and declining production in China. An upbeat OPEC statement on its planned output cut also supported the market.
International Brent crude futures were at $52.35 a barrel at 1040GMT, up 67 cents, or 1.3 percent, and heading back towards a one-year high of $53.73 seen earlier this month.
U.S. West Texas Intermediate (WTI) crude oil futures were trading at $50.96 per barrel, also up 1.3 percent, having been below $40 a barrel at the start of August.
European shares fell early on Wednesday after a slew of weak updates weighed on British companies Travis Perkins and Reckitt Benckiser. Akzo Nobel's results were hit by a weak pound.
The pan-European STOXX 600 index edged down 0.1 percent, following a 1.5 percent rise in the previous session.
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Earlier, Asian shares edged up for the second straight day after data showing Chinese gross domestic product expanded 6.7 percent in the year to September, exactly as forecast.
Other data showed retail sales rising 10.7 percent and urban investment 8.2 percent. Industrial output disappointed by growing only 6.1 percent.
"The upshot from today's data is that economic activity seems to be holding up reasonably well, with few signs that a renewed slowdown is just around the corner," said Julian Evans-Pritchard, China economist at Capital Economics.
"Nonetheless, the recent recovery is ultimately on borrowed time given that it has been driven in large part by faster credit growth and a property market boom, both of which policymakers are now working to rein in."
MSCI's broadest index of Asia-Pacific shares outside Japan added 0.4 percent on top of Tuesday's 1.4 percent jump.
The recent bounce in oil prices has helped lift a key market gauge of long-term euro zone inflation - the five-year, five-year forward rate - above 1.44 percent, its highest level since early June.
That remains well below the European Central Bank's inflation target of just below 2 percent, but it has taken the heat off the bloc's policymakers - who meet on Thursday - to introduce more easing measures.
Worries that they may eventually scale back their stimulus has seen German 30-year bond yields climb more than 20 basis points in the last fortnight, already on track for their biggest monthly rise in fourteen months.
The retreat in the dollar came after a report on U.S. consumer prices showed underlying inflation - stripping out food and energy - moderated slightly in September to 2.2 percent, leading the market to slightly pare back bets on a December rate hike.
Fed fund futures <0#FF:> imply around a 65 percent probability of a move, down from 70 percent.
Federal Reserve Chair Janet Yellen said last week the U.S. central bank could allow inflation to run above its target.
The euro was slightly higher against the weakening dollar at $1.0985.
Sterling, which plunged to a record low on a trade-weighted basis last week, continued to recover and hit an eight-day high on Wednesday after a UK government lawyer said that parliament would have to ratify any deal to take Britain out of the EU. (Additional reporting by Wayne Cole in Sydney; editing by Mark Heinrich)