Sterling gains fizzle out as CPI highlights UK rate view

* Sterling recovery from historic lows fizzles out * Euro/stg flat at 84.30 pence, cable flat at $1.5005

* Market eyes BoE minutes Wednesday

LONDON, Nov 18 (Reuters) - Sterling ended European trading on Tuesday little-changed against the euro and dollar after a record fall in UK inflation reminded investors of how low interest rates could go and brought a halt to its earlier rebound.

The pound had earlier extended the previous day's gains as dealers bought the currency at attractive levels following its slide to a record low against the euro and six-and-a-half year low against the dollar late last week.

A sterling-favourable shift in interest rate spreads had supported that corrective rebound earlier on Tuesday. But the October consumer price index was a reminder that inflation has likely peaked and could slow sharply in the coming months.

Bank of England policymaker Tim Besley said later that falling commodity prices means British inflation is likely to fall below target despite sterling's recent weakness.

October's CPI fell to 4.5 percent from a 16-year high of 5.2 percent in September, lower than the median forecast of 4.8 percent in a Reuters poll of economists. See [ID:nLI422016].

UK bond yields fell faster than euro zone equivalents on Tuesday -- the two-year gilt yield dipped below 2 percent for the first time since records began 30 years ago -- and sterling gave up its gains.  Continued...