* Dollar comes back from two-week low
* Asian stocks hit 10-year high in broad equity rally
* Pound slips after EU says Brexit talks at impasse
* Italy bond yields fall after government wins confidence vote
* Graphic: World FX rates in 2017 http://tmsnrt.rs/2egbfVh
By John Geddie
LONDON, Oct 12 (Reuters) - The dollar recovered on Thursday, having hit its lowest in more than two weeks as U.S. central bankers showed they were taking a more guarded view of inflation, helped by a steep fall in the British pound.
Asian stocks climbed to their highest in a decade, powering global shares to another record high and keeping them on course for their longest winning streak ever. Wall Street was set to open down from Wednesday's record high.
The dollar's dip came after minutes of the Federal Reserve's September meeting on Wednesday showed policymakers had a prolonged debate about whether inflation would pick up and the path of future interest rate rises if it did not.
But it slowly regained ground on Thursday and the pound tumbled after the European Union's chief negotiator said talks over Britain's exit from the EU were at an impasse.
"The minutes highlighted Fed officials are growing concerned low inflation might reflect more than transitory factors," RBC's global macro strategist Peter Schaffrik said.
European government bond yields fell in step with their U.S. peers. Italian yields led the trend, falling to near a three-week low after the government won support for electoral change likely to penalise the anti-establishment 5-Star Movement .
U.S. and German 10-year yields fell 1 basis points to 2.33 percent and 0.45 percent, respectively. Italian yields were down 3 basis points at 2.14 percent.
The eye-catching move in stock markets came in Asia, with MSCI's broadest index of Asia-Pacific shares outside Japan reaching their highest since December 2007, up 0.7 percent on the day.
Japan's Nikkei was up 0.4 percent after brushing 20,994.40, its highest since November 1996. South Korea's KOSPI added 0.55 percent to reach a record high. Hong Kong's Hang Seng scaled a decade-high.
MSCI's broadest index of world stocks also reached record highs, as it has for six of the past eight trading days . It is on course for its 12th month of gains in October, its best run ever.
"Fundamentally, the global economy is in decent shape. Corporate sentiment is also sound as evidenced by strong data like the Chinese PMI, U.S. ISM and Japanese tankan," said Masahiro Ichikawa, senior strategist at Sumitomo Mitsui Asset Management in Tokyo.
European stocks were less bouyant, with financial shares the biggest burden. Just Eat was the top performer after its merger with Hungryhouse got provisional clearance.