EMERGING MARKETS-Rising dollar, Greece weighs on sentiment

                                
 * Stronger dollar, Greek ratings cut knocks emerging markets
                                
 * Romania leu supported by IMF, peers under pressure
                                
 * Czech crown rebounds after fall on surprise rate cut
                                
 
                                
 By Sebastian Tong
                                
 LONDON, Dec 17 (Reuters) - Emerging assets fell on Thursday
as a resurgent dollar undermined appetite for higher risk
equities and bonds, but Romania's leu was supported by hopes its
International Monetary Fund loan programme would resume soon.
                                
 Greece's second successive ratings downgrade in a month cast
a pall over thin year-end trading while the Turkish lira dipped
to two-week lows ahead of a rate decision later in the day.
                                
 The U.S. Federal Reserve's decision on Wednesday to keep
rates unchanged was widely anticipated but its reminder that
special liquidity facilities would expire early next year sent
the dollar to three-month highs <.DXY> [ID:nN16119711]
                                
 The benchmark emerging equity index <.MSCIEF>, which tends
to fall when the dollar gains, fell for the third session in a
row, slipping 1.2 percent to trade at 961.4 by 1140 GMT.
Emerging sovereign debt <11EMJ> spreads widened seven basis
points to trade at 301 bps over U.S. Treasuries.
                                
 "People are focusing on the dollar. We are softer on all the
emerging currencies," said Nigel Rendell, senior emerging
markets strategist at RBC Capital Markets. "There is a little
bit of nervousness, as people are being caught short of the
dollar and everyone is rushing to reverse their positions."
                                
 In the aftermath of the state bailout of Austrian bank Hypo
Group Alpe Adria, sentiment in emerging Europe was further
dented by Standard & Poor's (S&P) Wednesday move to cut Greece's
ratings to BBB-plus from A-minus. [ID:nLDE5BF1QN]
                                
 "People are nervous about anything euro zone or central
Europe-related," said Rendell.
                                
 
                                
 RATE DECISIONS
                                
 Hungary's forint <EURHUF=> eased to a two-week low ahead of
a central bank meeting on Monday that is expected to result in
an interest rate cut. [ID:nLDE5BF2GT]
                                
 Investors are also keeping an eye on a Turkish central bank
policy meeting late in the day that is expected to leave rates
unchanged.
                                
 The Turkish lira dipped half a percentage point against the
dollar <TRY=> to over two week lows.
                                
 Snapping a six-day losing streak, the Czech crown <EURCZK=>
rebounded a day after falling against the euro on a surprise
move to cut interest rates to a record low.[ID:nLDE5BF161]
                                
 "The Czechs seem somewhat behind the curve with the rest of
the world considering exit strategies. The move weakened the
crown and should have a negative effect on the currency ahead,"
said SEB in a research note.
                                
 Romania's leu <EURRON=> reversed losses against the euro,
boosted by comments from the IMF that it was optimistic that it
could resume the country's 20 billion euro aid package in
February. [ID:nLDE5BG0K7]
                                
 The programme was suspended in November after a political
crisis that saw the government coalition fracture.
  (Additional reporting by Carolyn Cohn; editing by Patrick
Graham)