* Euro rallies versus Swiss franc but outlook shaky
* China reiterates support for euro zone countries
* Euro/dollar bounces around 200-day moving average (Adds quote, updates prices)
By Wanfeng Zhou
NEW YORK, Dec 23 (Reuters) - The euro rose from a three-week low against the dollar on Thursday after failing to break solidly through a key support level, though it remains vulnerable amid persistent worries about indebted euro zone countries.
The euro bounced around its 200-day moving average of $1.3093 on trading platform EBS. Investors have pushed the euro beneath this key support level for four straight sessions, only to see the currency bounce back later in the day.
Analysts said the euro will likely hold above $1.30 in the coming days, with traders reluctant to place big bets before year-end. The outlook for the single currency remains shaky, with fresh losses expected into 2011, they added.
The Swiss franc weakened broadly as investors booked profits on a rally that had seen the Swiss currency hit record highs versus the euro for six consecutive days. The euro zone debt crisis has prompted investors to flock to the safe-haven Swiss franc in recent weeks.
"We are looking for euro/dollar stability above 1.30 moving in to the end of the year," said Sacha Tihanyi, currency strategist at Scotia Capital in Toronto.
"With the late November and early December tests at that level, and the subsequent failure of euro/dollar to sustainably break below, I'd say that 1.30 looks like strong support," he added.
The euro fell as low as $1.3055 on EBS earlier, the lowest
level since Dec. 1. It was last flat at $1.3105
The euro was up 1.1 percent at 1.2597 Swiss francs
After hitting record lows against the franc for several consecutive days, the euro's rebound on Thursday provided a chance for traders to push it higher, especially with volume so low.
"This market is rife with people hunting for stops and with everyone and his brother long Swiss francs against the euro," said Michael Woolfolk, senior currency strategist at BNY Mellon in New York.
But Elsa Lignos, currency strategist at RBC Capital Markets, said as long as concerns about the euro zone debt crisis persist, "a lower euro/Swiss is very hard to fight."
RATINGS CUTS
Fitch Ratings cut Portugal's long-term and local currency ratings to A-plus from double-A-minus, reflecting an even slower reduction in its current account deficit and a much more difficult financing environment for banking. See [ID:nWNA7882]
Fitch also cut Hungary's long-term foreign currency credit rating to BBB- with a negative outlook on worries about public finances. See [ID:nLDE6BM0WR]
The euro had earlier risen after a Chinese Foreign Ministry spokeswoman said China was willing to help countries in the euro zone return to economic health and would support the International Monetary Fund bailout package for the bloc. For more, see [ID:nBJI002501]
On Wednesday, the Jornal de Negocios daily reported that China was looking to buy between 4 and 5 billion euros of Portuguese sovereign debt to help the country ward off pressure in bond markets.
"To have any discernible effect China will have to buy a lot more than 5 billion euros if they expect to have any impact on the negative sentiment surrounding Europe," said Michael Hewson, currency analyst at CMC Markets.
The dollar fell 0.6 percent to 83.06 yen