By Rae Wee

SINGAPORE (Reuters) - The yen swung between losses and gains on Friday in volatile trade, reflecting investors' skittishness after Tokyo was thought to have intervened to prop up the Japanese currency in the wake of a cooler-than-expected U.S. inflation report.

Moves in the yen against the dollar and other major currencies stole the spotlight on Friday, though in the broader market, Asian stocks cheered the growing bets for a September rate cut from the Federal Reserve.

The dollar was last 0.05% lower at 158.79 yen, after having risen more than 0.3% to an intraday high of 159.45 yen and falling 0.7% to a low of 157.75 yen within the span of the early Asian session on Friday.

Moves were similarly choppy in the other yen crosses, with the euro last up 0.02% against the yen while sterling rose 0.1%, both reversing earlier losses against the Japanese currency.

"It's either one of two things - the market's either jumping at shadows this morning waiting for a second round of intervention, and I think now that the (Bank of Japan) has committed again, there's good reason for them to come back," said Tony Sycamore, a market analyst at IG.

"The second thought is the market's just really skittish."

Speculation was rife that Japanese authorities had likely intervened in the currency market to shore up the yen on Thursday, after it surged nearly 3% against the dollar intraday.

Local media attributed the move to a round of official buying from Tokyo to prop up a currency that has languished at 38-year lows, though authorities as usual remained reticent on providing any hints.

The Nikkei newspaper reported that the BOJ conducted rate checks with banks on the euro against the yen on Friday, citing several sources.

ON TRACK

Elsewhere, MSCI's broadest index of Asia-Pacific shares outside Japan was little changed, though was on track for a 1.6% increase for the week, helped by growing bets of imminent U.S. rate cuts.

Those expectations were reinforced after Thursday's U.S. consumer price figures and as Fed officials showed increasing confidence that inflation was coming to heel.

Market pricing now shows an over 90% chance of a Fed easing cycle beginning in September, as compared to just over a 50% chance a month ago, according to the CME FedWatch tool.

"While the timing of eventual Fed rate cuts will depend on incoming data, this report, together with some softening in the labor market, has further tilted the balance of evidence towards an earlier start time," said David Doyle, head of economics at Macquarie.

However, Asian stocks failed to rally on Friday as they tracked a negative lead from Wall Street, after investors rotated into smaller companies following the U.S. inflation print.

"The broad move was driven by rotation and switching across styles and factors," said Chris Weston, head of research at Pepperstone. "It was the well-loved names that saw the selling and maybe this was partly technical given just how extended these plays are."

Japan's Nikkei similarly fell 2.3%, dragged down by technology stocks.

S&P 500 futures were little changed, while Nasdaq futures fell 0.02% and EUROSTOXX 50 futures were flat.

In other currencies, sterling eased 0.03% to $1.29095, though hovered near a roughly one-year high hit on Thursday, as comments from Bank of England policymakers and better-than-forecast GDP data led traders to reduce bets on an August rate cut in Britain.

The euro gained 0.04% to $1.0871, while the U.S. dollar was on the defensive and languished near a one-month low against a basket of currencies from the previous session.

Oil prices meanwhile rose in early Asian trading hours on Friday as signs of strong summer demand and easing inflationary pressures in the United States bolstered investor confidence. [O/R]

Brent futures rose 0.4% to $85.74 per barrel, while U.S. West Texas Intermediate (WTI) crude gained 0.56% to $83.08 a barrel.

Gold edged 0.07% lower to $2,413 an ounce. [GOL/]