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* U.S. June CPI 3% vs est 3.1%

* Futures up: Dow 0.57%, S&P 0.75%, Nasdaq 1.01%

July 12 (Reuters) - Wall Street futures sharply extended gains on Wednesday after data showed inflation cooled further in June, boosting investor optimism that the Federal Reserve is nearing the end of its monetary tightening cycle.

U.S. consumer prices rose modestly in June and logged their smallest annual increase in more than two years as inflation continued to subside.

The much awaited U.S. Labor Department report showed growth in core consumer prices, which excludes food and energy, eased to 4.8% from 5.3% in May on an annual basis. Economists had expected a 5% rise.

In the 12 months through June, the consumer prices (CPI) advanced 3.0%. It was the smallest year-on-year increase since March 2021 and followed a 4.0% rise in May.

Market participants were now betting with a 26% probability that the central bank would lift short-term borrowing costs by 25 basis points in November this year, compared with a 34% probability before the data was reported.

An overwhelming majority of traders continue to expect the Fed to raise the benchmark rate to the range of 5.25%-5.5% later this month.

"The CPI report has come in lighter-than-expected both on the headline and on the core and the markets are reacting in a positive fashion to that report," said Art Hogan, chief market strategist at B Riley Wealth.

"Its policy implications are clear, the Fed is at or near the end of this rate hike cycle."

At 8:43 a.m. ET, Dow e-minis were up 197 points, or 0.57%, S&P 500 e-minis were up 33.75 points, or 0.75%, and Nasdaq 100 e-minis were up 153.75 points, or 1.01%.

Megacap growth and technology stocks such as Microsoft , Amazon.com and Tesla added between 0.9% and 2.4% in premarket trading.

The CBOE Market Volatility Index hit a one-week low at 14.06.

Yield on the two-year and 10-year Treasury yields extended losses after the data.

A number of Fed officials, including Minneapolis Fed President Neel Kashkari, who is a voting member this year, are scheduled to speak during the day. Investors will keep a close watch on the remarks they make.

Later this week, the focus will shift to second-quarter earnings season, with Wall Street lenders expected to report higher profits for the quarter as rising interest payments offset a reduction in dealmaking.

(Reporting by Johann M Cherian and Bansari Mayur Kamdar in Bengaluru; Additonal Reporting by Shashwat Chauhan Editing by Shinjini Ganguli)