By Chris Prentice and Tom Wilson

NEW YORK/LONDON (Reuters) -Global shares and Wall Street indexes rose on Wednesday after an in-line inflation reading kept intact bets on the Federal Reserve cutting interest rates later this month.

The dollar hit a two-week high, and gold prices rose. Oil prices finished up more than $1 after the European Union agreed to another round of sanctions threatening Russian oil.

European shares recouped earlier losses to finish higher. U.S. Treasury yields rose as the Treasury Department sold long-dated supply and data showed a widening U.S. budget deficit.

The Dow Jones Industrial Average fell 99.27 points, or 0.22%, to 44,148.56, the S&P 500 rose 49.28 points, or 0.82%, to 6,084.19 and the Nasdaq Composite rose 347.65 points, or 1.77%, to 20,034.89.

MSCI's gauge of stocks across the globe rose 5.04 points, or 0.58%, to 871.45.

A Labor Department report showed the Consumer Price Index (CPI) rose 0.3% on a monthly basis in November, matching the 0.3% increase forecast by economists polled by Reuters. Annually, it stood at 2.7%, in line with estimates.

"Everything's exactly in line with estimates ... it's very likely that you will see the Fed probably go ahead with what they projected, cutting 25 basis points (later this month)," said David Miller, chief investment officer at Catalyst Funds.

The European STOXX 600 index rose 0.28%.

The yield on benchmark U.S. 10-year notes rose 5.2 basis points to 4.273%, from 4.221% late on Tuesday.[US/]

The dollar index, which measures the greenback against a basket of currencies including the yen and the euro,rose 0.31% to 106.68, with the euro down 0.31% at $1.0493.

MSCI's broadest index of Asia-Pacific shares outside Japan closed lower 0.46% to 586.09.

China's yuan fell and currencies across Asia lost ground on the dollar after Reuters reported that China was considering allowing a weaker currency next year to weather any higher tariffs.

CUTS AHEAD

The Canadian dollar rallied against the greenback and all other G10 currencies as the Bank of Canada cut interest rates by half a percentage point, as expected, but shifted to more hawkish guidance on prospects for additional easing. [CAD/]

Canada has already reduced rates by 125 basis points (bps) this cycle but news last week that the jobless rate spiked to an eight-year high of 6.8% in November has driven bets on an extra 50 bps of cuts, which would bring the overnight rate to 3.25%.

Markets have fully priced a European Central Bank rate cut on Thursday and a 61% chance of a 50 bps cut from the Swiss National Bank, which would help cool a rally in the franc.