* Investors focus on drop in U.S. weekly jobless claims data
* Dollar/yen recovers after pressure from talk Japan corp tax may not be cut
NEW YORK Aug 15 The dollar climbed to a near two-week high against the euro and a more than one-week high against the yen on Thursday as a drop in U.S. weekly initial jobless claims prompted investors to think the Federal Reserve might start trimming its stimulus sooner rather than later.
Investors had been focused on the U.S. CPI report until the data showed the number of Americans filing new claims for unemployment benefits fell to a near six-year low last week, hinting at a pick-up in job growth in early August.
Initial claims for state unemployment benefits dropped 15,000 to a seasonally adjusted 320,000, the lowest since October 2007, the Labor Department said on Thursday. .
U.S. consumer prices rose as expected in July, which could comfort Fed officials worried about low inflation as they weigh trimming their massive bond buying program.. One sticking point for Fed policymakers had been the level of U.S. inflation, which is below the Fed's target.
"The drop in initial claims to its lowest level since November 2007 is unambiguously positive for the dollar, especially because the data is free of any seasonal or auto sector-related aberrations," said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington.
"Combined with the rise in the headline CPI to 2.0 percent, year over year, the data adds to the argument for a near-term taper by the Fed and should continue to see the dollar outperform."
The euro was last down 0.1 percent at $1.3238, while the dollar was up 0.4 percent at 98.47 yen. The euro touched its lowest against the dollar since Aug. 2 while the dollar rose to its highest against the yen since Aug. 5.
The greenback's fortunes have been tied for months to expectations of when the U.S. central bank will start to "taper" its monthly asset purchases from the current $85 billion. It slid more than 4 percent between July 9 and Aug. 8, since when it has risen slightly but not made significant gains.
St. Louis Fed President James Bullard added to the uncertainty late on Wednesday, saying he had not made up his mind if next month's policy meeting would be too soon to start curbing bond buying, as he was wary of being too aggressive.
"This sort of broad two-way bouncing around in the dollar is what we are going to see in the near term, until the market has some certainty on Fed tapering, and that probably won't come until the Fed actually announces it," said Adam Cole, global head of FX strategy at RBC Capital Markets in London.
But the ongoing debate about when the Fed will taper was pushed aside by the initial weekly jobless claims report, data that is usually ignored by the Street.
The dollar was up 0.2 percent at 81.870 against a basket of currencies, recovering from a loss before the data.
The yen had earlier risen against the dollar after Japan's chief government spokesman Yoshihide Suga and Finance Minister Taro Aso played down a story in the Nikkei business daily that the government was considering cutting the corporate tax rate.
Japanese stocks fell, pushing the yen higher. The yen has recently held an inverse correlation to Tokyo shares .
The yen has faltered against the dollar lately on expectations Japan will take fresh steps to end deflation. Aso's comments that corporate tax cuts would not have an immediate impact were seen as a blow to that view.