* Dollar index down less than 0.1% * Australian dollar close to two week highs * Graphic: World FX rates tmsnrt.rs/2RBWI5E LONDON, Feb 11 (Reuters) - The dollar fell during a quiet Asian session on Thursday, after softer-than-expected U.S. inflation data for January and a reiteration of the Federal Reserve’s dovish policy stance, but recovered some losses as European markets opened. U.S. core inflation last month was zero, data showed on Wednesday, against market expectations of 0.2%. Federal Reserve Chair Jerome Powell said that while he expected base effects and pent-up demand when the economy fully reopens to boost inflation, that was likely to be transitory, citing three decades of lower and stable prices. Powell also reiterated that the central bank’s new policy framework could accommodate annual inflation above 2% for some time before raising rates, reinforcing market expectations of weak returns from the dollar. Currency market moves were small overnight because of the Lunar New Year holidays in Japan and China, but the dollar fell close to two-week lows against a basket of currencies. At 0805 GMT, it was lower on the day at 90.411, having recovered some overnight losses as European markets opened . “Any shift in the policy stance (to a hawkish, less accommodative side) is not imminent, US front end rates are to remain anchored, the US curve is set to steepen further and real rates are to remain deeply negative,” ING FX strategists wrote in a note to clients. “As the global economy starts its post winter recovery in Q2, this suggests more upside to cyclical currencies, while negative US real rates should also offer helping hands to the low yielding ones, such as EUR vs the dollar,” they said. At 0806 GMT, the euro was little changed against the dollar, at $1.2121. The Australian dollar -- which is seen as a liquid proxy for risk appetite -- was up 0.3% at 0.7743 versus the dollar, having come close to a two-week high overnight. The British pound was little changed at $1.3825, a below the three-year high of $1.3865 reached on Wednesday. Oil prices fell, giving up some recent gains after Brent crude strengthened for 9 sessions in a row. The commodity-linked Norwegian crown eased off from Wednesday’s one-year high against the euro and the pair changed hands at 10.261 at 0817 GMT . Elsewhere, U.S. President Joe Biden and his Chinese counterpart Xi Jinping spoke for the first time since the U.S. election. Biden said a free and open Indo-Pacific was a priority and raised concerns about China’s actions in Hong Kong, Xinjiang and Taiwan. “President Biden seems to lay a ground of his China approach which might be somewhat different from Trump in a few aspects, but the bottom line is US sees China as a `strategic competitor’,” Commerzbank senior economist Hao Zhou wrote in a note to clients. With China’s markets closed, the yuan showed little reaction to the phone call. Bitcoin was trading at around $44,682 at 0825 GMT . The cryptocurrency, which is sometimes viewed as a hedge against inflation, has fallen around 7% since Tuesday’s record high. Ethereum also dropped from recent record highs .