By Leika Kihara and Satoshi Sugiyama TOKYO (Reuters) -Core inflation in Japan's capital accelerated in December while services inflation held steady, data showed on Friday, keeping alive market expectations for a near-term interest rate hike.

The Tokyo core consumer price index, which excludes volatile fresh food costs, rose 2.4% in December from a year earlier.

Inflation in Tokyo accelerated for a second month in December, as the government temporarily phased out utility subsidies, a result that will likely support expectations of an interest rate hike next year.

Inflation in Tokyo surged in December, climbing to 2.4 percent as price pressures widened. With the Bank of Japans January policy meeting looming, markets are speculating on whether a further rate hike is on the