By Brigid Riley

TOKYO (Reuters) -The dollar sputtered at broadly lower levels on Wednesday after slumping overnight as a surprisingly softer U.S. inflation reading bolstered bets that the Federal Reserve has reached the end of its monetary tightening cycle.

The offshore Chinese yuan, meanwhile, received some support after domestic industrial output and retail sales growth beat expectations.

The activity data generally appeared to be "further evidence of very slow progress being made" in China's economy, said Rob Carnell, Asia-Pacific Head of Research and Chief Economist at ING.

The offshore yuan briefly ticked up to a three-month high of $7.2385 against the dollar before easing back somewhat to $7.2477.

At the same time, glum news continued to roll out of China's property sector, with sales falling at a faster pace in October and investment in real estate slumping, official data showed.

With no end in sight for problems in the sector, that's likely to seep into other parts of the Chinese economy, "keeping them just a little bit mediocre," said Carnell.

The New Zealand dollar, which can act as a proxy for China, ticked up to a one-month high of $0.6029 against the dollar.

The sell-off in the dollar drove a rally for many of its peer currencies, with the euro sitting just below an over two-month high hit on Tuesday.

The frenetic currency market activity was sparked by data showing U.S. consumer prices were unchanged in October, with the annual rise in underlying inflation the smallest in two years. In the 12 months through October, the CPI climbed 3.2% - below economists' estimates - after rising 3.7% in September.

The data prompted market participants to all but eliminate the chance of another rate hike at the Fed's December monetary policy meeting, while bets of a rate cut in May next year increased to around 50%, according to the CME Group’s FedWatch Tool.

Traders reacted quickly to the shift in market pricing by sending the dollar tumbling 1.5% overnight against major currencies. At the same time, U.S. Treasury yields, which have helped to boost the greenback, tumbled.

The dollar index, which measures the currency against a basket of peers, last stood at 104.14, not far from Tuesday's two-month low of 103.98.

With the dollar on the back foot, the euro settled around $1.08725 after touching its highest since August the previous day.

The pound was fetching $1.2489, around levels last seen in September.

The greenback's overnight fall saw some relief for the languishing yen, which eased off Monday's fresh one-year low of 151.92.

Dollar/yen crept up slightly to 150.68, as data revealed Japan's economy contracted in July-September, complicating the central bank's efforts to gradually exit from its ultra-easy monetary policy.

Still, Moh Siong Sim, currency strategist at the Bank of Singapore, sees softer U.S. yields and the risk of intervention by the Japanese government limiting the likelihood of the yen weakening much further than it already has.

Between those factors and a Fed which is likely to retain a somewhat hawkish tone, dollar/yen is a "range-bound story for the time being," he said.

(Reporting by Brigid RileyEditing by Shri Navaratnam and Lincoln Feast.)