FOREX-Firm U.S. GDP data supports dollar, emerging markets steady

* Emerging markets stabilize following central bank rate hikes

* Steady fourth-quarter U.S. growth supports dollar

(Updates market action, adds quotes, changes dateline; previous LONDON)

By Richard Leong

NEW YORK, Jan 30 (Reuters) - The dollar rose against a basket of currencies on Thursday after data showed the world's largest economy produced solid growth in the fourth quarter, reviving the appeal of the greenback even against the safe-haven yen and Swiss franc.

The initial reading of fourth-quarter U.S. gross domestic product came in at annualized rate 3.2 percent, matching analysts' forecasts. This followed a 4.1 percent rise in the third quarter, bringing the year-over-year growth rate to 1.9 percent. News Search ID:nLLAUCEALF News Search ID:nLNSUCEACX

The GDP reading should reinforce the notion that the Federal Reserve will continue reducing its monetary stimulus in the coming months, pushing up U.S. bond yields and making the dollar more attractive.

"All these factors are supportive of the dollar," said Jonathan Lewis, founding principal of Samson Capital Advisors in New York. "While the overall profile on the U.S. hasn't changed, the economy continued to muddle along on a healing path."

However, the recent flare-up in political and currency woes in Turkey, Argentina and South Africa has limited the dollar's upward move, with some traders preferring the yen and Swiss franc CHF= , analysts said.

"People are not sure whether we have hit the bottom of this emerging market panic," said Marc Chandler, chief global currency strategist with Brown Brothers Harriman & Co. in New York.

The Turkish lira TRY= and South African rand ZAR= rebounded in New York trading after selling off in Asian trading in response to further stimulus reduction from the U.S. central bank. Billions of dollars from the Fed stimulus program had flooded into Turkey, South Africa and other fast-growing economies.

The Fed, as expected, said on Wednesday it will reduce its monthly bond purchases by $10 billion in February to $65 billion as policymakers reckoned the U.S. economy needs less stimulus.

In a Reuters poll, 17 of the U.S. primary dealers surveyed forecast another $10 billion monthly cut in the Fed's third round of quantitative easing in March. News Search ID:nL2N0L31G3

The Turkish lira and the rand have stabilized after their central banks hiked local interest rates in an attempt to shore up investor confidence.

As anxiety that emerging markets' troubles would spread subsided a bit, investors reduced their safe-haven holdings of the yen, Swiss franc and U.S. and German government bonds. They moved some cash back into the dollar, stocks and other riskier investments.

The dollar was up 0.6 percent .DXY against a basket of currencies at 81.025.

The euro EUR= was down 0.6 percent against the dollar at $1.3584, not far from its session low of $1.3566 set shortly after the U.S. GDP data.

The greenback was up 0.3 percent against the yen at 102.58 yen . It has retraced about 0.8 percent from the seven-week low set on Monday.

The dollar also gained against the Swiss franc, rising 0.7 percent to 0.9008 Swiss franc.

(Additional reporting by Anirban Nag in London; Editing by Dan Grebler)

((richard.leong@thomsonreuters.com)(+1 646 303 6313)(Reuters Messaging: richard.leong.thomsonreuters.com@thomsonreuters.net)(Twitter @RichardLeong2))

 
((     
    Currency bid prices at 10:24AM (1524 GMT) 
Description    RIC    Last    U.S. Close 
 Previous  
 Session    Pct Change    YTD Pct 
 Change    High Bid    Low Bid 
Euro/Dollar    EUR=    $1.3572    $1.3662    -0.66%    -1.26%    +1.3665    +1.3568 
Dollar/Yen    JPY=    102.5900    102.2800    +0.30%    -2.43%    +102.7900    +102.0800 
Euro/Yen    EURJPY=    139.23    139.73    -0.36%    -4.06%    +139.9400    +138.9000 
Dollar/Swiss    CHF=    0.9013    0.8939    +0.83%    +0.95%    +0.9024    +0.8945 
Sterling/Dollar    GBP=    1.6510    1.6560    -0.30%    -0.28%    +1.6566    +1.6446 
Dollar/Canadian    CAD=    1.1169    1.1170    -0.01%    +5.17%    +1.1198    +1.1151 
Australian/Dollar    AUD=    0.8783    0.8739    +0.50%    -1.46%    +0.8800    +0.8712 
Euro/Swiss    EURCHF=    1.2232    1.2222    +0.08%    -0.32%    +1.2248    +1.2220 
Euro/Sterling    EURGBP=     0.8220    0.8248    -0.34%    -0.93%    +0.8268    +0.8219 
NZ Dollar/Dolar    NZD=    0.8158    0.8211    -0.65%    -0.58%    +0.8218    +0.8138 
Dollar/Norway    NOK=    6.2380    6.1644    +1.19%    +2.83%    +6.2520    +6.1604 
Euro/Norway    EURNOK=    8.4697    8.4211    +0.58%    +1.57%    +8.5026    +8.4106 
Dollar/Sweden    SEK=    6.5115    6.4490    +0.22%    +1.39%    +6.5189    +6.4520 
Euro/Sweden    EURSEK=    8.8414    8.8222    +0.22%    -0.28%    +8.8593    +8.8050 
     
     
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