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* DAX touches highest since July

* Real estate stocks lead sectoral gains

* Philips drops following FDA alert on medical device

Nov 29 (Reuters) - German shares led gains in Europe on Wednesday after data pointed to easing inflation in the most populous state in the country, boosting expectations that the European Central Bank will cut interest rates next year.

The German DAX rose 1.0% to touch a four-month high after data showed consumer prices in the state of North Rhine-Westphalia fell 0.3% month-on-month in November and were up 3.0% year-on-year.

The preliminary inflation figure for Germany will be released later in the day, while overall euro zone inflation numbers will be published on Thursday.

European bond yields fell, with the benchmark 10-year German bond yield falling to a more than three-month low of 2.4%.

The continent-wide STOXX 600 index rose 0.5%, with rate-sensitive real estate stocks rallying over 2%.

Traders priced in interest rate cuts of over 105 basis points (bps) in 2024 from around 95 bps the day before and also discounted a 90% chance of a first 25 bps rate cut in April 2024.

"The ECB is going to come under increasing pressure going forward to cut rates. Growth in the euro-zone is flat, if not already in recession and inflation is heading in the right direction," said Stuart Cole, chief macro economist at Equiti.

"I am in the camp that thinks the ECB will be forced to blink first and cut rates ahead of its peers. Compared to the US it does not have the underlying strength in its economy."

While most regional markets gained, UK's internationally focussed FTSE 100 dipped 0.1% as the pound climbed to a fresh three-month high.

Bank of England Governor Andrew Bailey said the central bank "will do what it takes" to get inflation down to its 2% target, adding that he had not yet seen enough progress towards that goal to be confident.

Among single stocks, Philips fell 5.6% after the U.S. Food and Drug Administration said it was alerting patients about a safety issue with the Dutch healthcare technology company's machines used for the treatment of obstructive sleep apnea.

Siltronic jumped 7.8% after Berenberg upgraded the German chip equipment supplier to "buy" from "hold". (Reporting by Sruthi Shankar in Bengaluru; Editing by Shinjini Ganguli)