* European stocks near 3-mnth high, euro near 7-1/2 mnth low
* Eurozone inflation bolsters ECB easing bets
* Oil slips for fifth day ahead of Friday OPEC meeting
* Fed's Lockhart says "compelling" case to raise U.S. rates
By Marc Jones
LONDON, Dec 2 (Reuters) - European stocks hovered at a 3-month high and the euro was just above a 7-1/2-month low on Wednesday as euro zone inflation remained barely visible and underlined just why the ECB is set for more stimulus.
However, Wall Street was expected to see a subdued start and the dollar was still recovering from an overnight wobble, though European investors were still mostly focused on Thursday's expected moves from European Central Bank chief Mario Draghi.
The euro dropped back below $1.06 as the first reading of November euro zone inflation stayed at 0.1 percent, far below the ECB's near 2 percent target and reiterating the worries that it could stifle any serious economic growth.
Markets are expecting another salvo of easing measures from Draghi on Thursday, including an expansion of its bond buying programme and even higher charges for commercial banks that hoard excess cash.
"It (euro zone flash HICP data) is not consistent with the trend that the ECB was expecting," said Ruben Segura-Cayuela, a euro zone economist at Bank of America Merrill Lynch.
"We are expecting a one-year extension on QE purchases and quantities to go up to as much as 70 billion euros a month. We also see a cut in the deposit rate, we think 10 basis points, but it could be 20."
The hopes for an early Draghi Christmas present had initially lifted Germany's DAX, France's CAC 40 and Spain's IBEX but all three had run out of steam as the start of U.S. trading approached.
The pan-European FTSEurofirst, however, stayed flush against a 3-month high hit the previous day as London's FTSE kept it steady with a 0.4 percent gain
It came as weak construction data left the pound near a 7-month low and as British politicians were preparing to vote on whether to join allied bombing of Islamic State targets in Syria.
With the euro back on the slide again, the U.S. dollar index pushed back above the 100 threshold and toward the 12-year high it had hit in March.
Federal Reserve head Janet Yellen speaks in Washington later and focus will be on what she has to say, with the Fed widely expected to pull the trigger on its first hike in U.S. interest rates in almost a decade on Dec. 16.
The economic data has not been playing ball with the Fed's policy plans in recent weeks. With a huge consensus now assuming a hike, the sharp downturn in the manufacturing surveys have come alongside weaker retail sales and Chicago PMIs.
"It would be historic if she (Yellen) were to raise rates into a slowdown." said Didier St George, managing director at fund manager Carmignac. "It would be a concern."
There was a more positive signal, however, from data showing U.S. private employers had added 217,000 jobs in November, the biggest increase since June.
Four other Fed members aside from Yellen were also due to speak on Wednesday, with Atlanta Fed President Dennis Lockhart first out the block saying there was a "compelling" case to raise U.S. rates.
Wall Street futures pointed to the main S&P 500, Dow Jones Industrial and Nasdaq markets starting flat to slightly lower.
The euro zone's limp inflation data meant downward pressure was firmly back on euro zone government bond yields with 10-year German yields down 4 basis points to 0.44 percent.
Two-year yields stayed just off a -0.43 percent low hit Tuesday, while going in the other direction, U.S. 2-year yields at 0.93 were eyeing a return to their recent 5-1/2 year highs.
"The poor ISM data (on Tuesday) is unlikely to derail any rate hike plans as U.S. domestic demand is firm and wages show inflationary signs," wrote Makoto Noji, a senior rates strategist at SMBC Nikko Securities in Tokyo.
MSCI's broadest index of Asia-Pacific shares outside Japan fell for a fifth straight day overnight as a 1 percent fall in Thai stocks and host of other bourses offset a 3.6 percent rebound in Shanghai.
Japan's Nikkei also ended in the red but it had barely budged from a 3-1/2 month high and Australian stocks recovered from early losses after robust domestic GDP data showed the economy growing at a brisk 0.9 percent.
The Australian dollar, already on a bullish footing after the Reserve Bank of Australia (RBA) skipped a chance on Tuesday to cut interest rates or talk down the currency afresh, touched a 7-week high of $0.7345.
In commodities, crude oil prices sagged for a fifth straight session on expectations that OPEC will not cut output when they meet later this week, despite the market's supply glut.
U.S. crude was down 0.7 percent at $41.40 a barrel and Brent lost 1 percent to $43.98 a barrel.
Copper, attuned to global growth, slipped too on persistent worries over top consumer China, but traders said a pledge by some of the country's smelters to cut production put the market at risk of a huge short-covering rally.
China's 10 major copper producers have asked the government to buy metal for its strategic stockpile, joining a growing chorus in the country's stricken base metal industry that is pleading for state intervention.
Additional reporting by Shinichi Saoshiro; Editing by Gareth Jones