The euro slipped from 11-week highs and Asian stocks marked time on Wednesday as a recent rally lost steam after a drop in U.S. consumer confidence, while the Australian dollar fell on a sharp slowdown in inflation.

The MSCI index of Asia Pacific ex-Japan stocks <.MIAPJ0000PUS> was largely flat in early trade, a day after hitting a 2- month high.

Overnight on Wall Street, the S&P snapped a three-day winning streak after mixed earnings reports and as a fall in consumer confidence showed worries over the job market persisted.

But Japan's Nikkei average <.N225> bucked the global softness, rising 1.9 percent on a weaker yen and strong corporate earnings.

Shares of Canon <7751.T> jumped more than 4 percent after the world's No. 1 camera maker reported its strongest profit in seven quarters, though its second half could be tougher because of Europe's economic woes and the yen's strength.

South Korea's stock index <.KS11> (KOSPI) edged up 0.1 percent.

There will be a few bumps along the way, but the market still has upward momentum. Risk appetite is improving and the optimism is palpable, said Suh Dong-pil, a market analyst at Hana Daetoo Securities.

The Australian dollar fell from $0.9010 to $0.8950 after the country reported a weakening in core inflation to its lowest in over three years, all but ruling out the need for an interest rate rise next week and possibly for the rest of the year.

August inter-bank futures market rallied, pricing out chances of a rate hike by the Reserve Bank of Australia at its next monthly policy meeting on August 3. Markets had been factoring in a 30 percent chance of a hike before the data.

The euro hovered below a key level against the dollar, running into profit taking after it hit an 11-week high in the previous day.

The euro slipped below the psychological, and technically crucial, level of $1.30, having hit a high of $1.3045 on Tuesday. The $1.30 level coincides with the 61.8 percent Fibonacci retracement of the euro's selloff since mid-April.

Spot gold hovered near $1,163 an ounce, a day after falling 2 percent to a near three-month low when the drop in U.S. consumer confidence and an option expiry prompted heavy selling.

U.S. crude futures fell 32 cents to $77.18 a barrel, extending a nearly 2 percent drop on the previous day, after U.S. crude inventories rose unexpectedly with imports up.

(Editing by Simon Rabinovitch)

Japan South Korea Nikkei 225 S&P