Euro hits two-month low, stocks inch up after ECB holds rates

LONDON (Reuters) - The euro fell to a fresh two-month low against the dollar on Thursday, while stocks inched higher, after the European Central Bank held interest rates at a record high of 4% as expected but sent a signal that it is preparing for a cut.

The euro softened, leaving it down 0.15% at $1.0717, from $1.0728 previously, and at its lowest since mid-February.

Europe's STOXX 600 equities index was last down 0.36%, having traded 0.48% lower beforehand.

The German 10-year bond yield, the benchmark for the bloc, was last unchanged from 2.455% before the ECB announcement, up 3 bps on the day

Stronger-than-expected March U.S. inflation data on Wednesday sparked a jump in U.S. and European bond yields and stocks tumbled as investors bet the Federal Reserve would leave rates higher for longer.

(Reporting by Harry Robertson; editing by Dhara Ranasinghe)