* Wall Street futures hold gains after data feeds Fed rate debate

* Crypto markets cheer first US bitcoin ETF approvals

* Dollar subdued, oil rebounds after latest stumble

LONDON, Jan 11 (Reuters) - World stock markets tapped the brakes on Thursday as traders digested the latest U.S. inflation data and amid widespread excitement in the crypto world after the United States approved the first exchange-traded funds (ETFs) to track bitcoin.

MSCI's top world index was slipping towards the red , with Wall Street futures nudged lower by the U.S. figures alongside London, Paris, and Frankfurt, which had spent most of the morning up after Tokyo's Nikkei also breached the 35,000 point barrier for the first time since 1990.

The softer mood looked likely to continue on Wall Street, where along with expected dips in the main indexes when they reopen , the main volatility and fear gauges had started to flare higher again.

Attention had zeroed in on the just-released U.S. consumer price index report (CPI) for December. Core CPI remained unchanged at 0.3% from the month before, but the headline number also rose 0.3% which was pacier than the 0.1% recorded in November.

"If today’s report is the start of an upward pattern, there is a good chance that the Fed will delay rate cuts until later than previously expected," said Charles Schwab Managing Director Richard Flynn.

U.S. Treasury yields, which are driving global borrowing costs at the moment, reversed overnight falls to tick back above 4%.

Germany's equivalent 10-year yield hit 2.2%, its highest in almost a month after the U.S. data, which also came after some hawkish comments from European Central Bank member Isabel Schnabel on Wednesday.

Since the start of the year, investors have been rethinking just how sharply and early the Fed and others will cut interest rates. Fed futures prices indicate traders anticipate 140 basis points (bps) of easing this year, compared with 160 bps of cuts expected at the end of 2023.

Still, it is higher compared to the Fed's projection of 75 bps of cuts in the year. Markets are still pricing in a chance of a rate cut as soon as in March, the CME FedWatch tool showed.

Federal Reserve Bank of New York President John Williams said on Wednesday it was too soon to call for rate cuts as the central bank still had some distance to go on getting inflation back to its 2% target.

"It looks like the market may have jumped the gun in pencilling in as many as six Federal Reserve rate cuts in 2024," Schwab's Flynn added.

BITCOIN BOOST

Crypto markets were the day's other main focus after U.S. regulators late on Wednesday approved the first U.S.-listed ETFs to track bitcoin.

Though long-expected, the green light marks a watershed moment for the world's best known cryptocurrency, with most of the new funds expected to begin trading on Thursday.

Standard Chartered's head of digital assets research Geoff Kendrick has estimated the approval, along with bitcoin's 'halving' in April, which cuts the currency's supply and historically kick-starts price rises, could send it to $100,000 by the end of the year.

"If ETF-related inflows materialise as we expect, we think an end-2025 level closer to $200,000 is possible," he said, assuming that between $50 billion and $100 billion would flood into the new U.S. ETFs by the end of the year.

On Thursday, bitcoin was up 4% a shade below $48,000, having surged more than 70% since October in anticipation of the decision from the regulator.

In the more traditional parts of the currency market, the Japanese yen saw losses again and was last at 146.28 per dollar, having dropped 0.9% overnight. Data this week showed Japanese workers' real wages shrank for a 20th straight month in November - confounding officials' wishes to see wage gains before lifting interest rates.

The dollar was lifted broadly by the inflation report, which in turn limited gold's rise to 0.2% to $2,026 an ounce , and oil put on more than 1.5% to leave Brent at $78.25 a barrel.

It had dropping nearly a dollar in the previous session after a surprise jump in U.S. crude stockpiles raised worries about demand in the largest oil market.

Investor focus will also be on the U.S. earnings season, with banking giants JPMorgan Chase, Bank of America , Citigroup and Wells Fargo all due to report earnings on Friday.

(Reporting by Marc Jones in London and Ankur Banerjee in Singapore Editing by Mark Potter and Timothy Heritage)