Does Keil optimise that ? I know it should do, but does it ?

Yes. And, there's no BS you need to do to you code to make it happen. This works for do...while, while, and for loops.

line level    source

   1          void main (void)
   2          {
   3   1      volatile unsigned char i;
   4   1      
   5   1      while (--i != 0x00)
   6   1        {
   7   2        }
   8   1      
   9   1      for (i=100; i; --i)
  10   1        {
  11   2        }
  12   1      
  13   1      do
  14   1        {
  15   2        }
  16   1      while (--i);
  17   1      }

             ; FUNCTION main (BEGIN)
                                           ; SOURCE LINE # 1
                                           ; SOURCE LINE # 2
0000         ?C0001:
                                           ; SOURCE LINE # 5
0000 D500FD      R     DJNZ    i,?C0001
                                           ; SOURCE LINE # 6
                                           ; SOURCE LINE # 7
0003         ?C0002:
                                           ; SOURCE LINE # 9
0003 750064      R     MOV     i,#064H
0006         ?C0003:
                                           ; SOURCE LINE # 10
                                           ; SOURCE LINE # 11
0006 D500FD      R     DJNZ    i,?C0003
                                           ; SOURCE LINE # 14
                                           ; SOURCE LINE # 15
0009         ?C0006:
                                           ; SOURCE LINE # 16
0009 D500FD      R     DJNZ    i,?C0006
                                           ; SOURCE LINE # 17
000C 22                RET     
             ; FUNCTION main (END)

Jon