* European stock markets open flat
* Some caution ahead of Fed's Yellen testimony on policy
* China inflation picks up
* Dollar pressured after Trump's national security aide quits
* Graphic: World FX rates in 2017 http://tmsnrt.rs/2egbfVh
By Dhara Ranasinghe
LONDON, Feb 14 (Reuters) - Stocks flatlined and the dollar dipped on Tuesday as caution set in before testimony from Federal Reserve chief Janet Yellen that may offer clues to the timing of the next U.S. interest rate rise.
Adding to pressure on the dollar was the resignation of President Donald Trump's national security adviser Michael Flynn, who quit over revelations he had discussed U.S. sanctions against Moscow with the Russian ambassador to the United States before Trump took office, and misled Vice President Mike Pence about the conversations. prospect of Trump-led economic stimulus in the United States has underpinned the dollar and stocks in recent days, powering U.S. equity markets to record highs on Monday and helping Asian shares to eke out 19-month peaks on Tuesday.
But the buoyant mood in global markets was tempered somewhat as attention turned to semi-annual testimony by Yellen on Tuesday and Wednesday that could highlight the likelihood of two or more U.S. interest rate hikes this year.
Dallas Fed President Robert Kaplan on Monday argued the Fed should move soon to avoid falling behind the curve, especially as fiscal policy could drive faster growth and inflation.
"If Yellen wants March to be a live meeting as other Fed officials have suggested it is, she will have to adopt a more hawkish tone beyond the usual reference to data dependency," said ING senior rates strategist Martin van Vliet.
"Currently we calculate a market implied probability of around 17 percent for a March rate hike."
The STOXX 600 .STOXX , Europe's leading index of top 600 shares, dipped 0.2 percent to 369.43 points, pulling back from more than one-year highs hit on Monday.
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In Asia, MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS edged up 0.2 percent, trying for its fifth straight session of gains.
Japanese shares ran into trouble after Toshiba Corp 6502.T delayed an anxiously awaited earnings release. Toshiba said it would take a 712.5 billion yen ($6.28 billion) writedown on its U.S. nuclear business, wiping out its shareholder equity and dragging the company to a full-year loss. was also some eye-catching data from China, where producer price inflation picked up more than expected in January to near six-year highs, while consumer price inflation neared a three-year high. stock market futures pointed to a slightly weaker open on Wall Street ESc1 . U.S. stock indexes hit historic peaks on Monday, with the benchmark S&P 500's market value topping $20 trillion as investors bet tax cuts promised by Trump would boost the economy. ON BACK FOOT
The dollar fell after Flynn's resignation and as investors looked ahead to Yellen's testimony.
The dollar index .DXY dipped 0.2 percent against a basket of currencies to 100.74 but was still near its strongest since Jan. 20, while the euro was 0.3 percent firmer after three sessions of losses to stand at $1.0626 EUR= .
Against the yen, the dollar weakened 0.2 percent on the day to stand at 113.46 yen JPY= , off Monday's high of 114.17 but well above a 10-week low of 111.59 yen touched a week ago.
In commodity markets, metals were on a tear thanks to supply disruptions and strong Chinese demand.
Copper CMCU3 hit its highest since May 2015 after shipments from the world's two biggest copper mines were disrupted. MET/l
Iron ore climbed to its since August 2014 amid reports China plans to cut steel capacity by at least half in 28 cities across five regions during the winter heating season.
Oil recouped some ground on OPEC-led efforts to cut output, though rising production elsewhere kept prices to a narrow range that has contained them so far this year. West Texas crude CLc1 added 22 cents to $53.15 a barrel, having shed 1.7 percent overnight. Brent futures LCOc1 rose 33 cents to $55.90 a barrel.