FOREX-Euro hits 5-mo low vs dlr; China hurts risk appetite

* Euro at 5-mo low vs dlr; breaks 200-day moving avg

* Greek woes hurt euro; U.S. senate election helps dollar

* China lending curbs weighs on commodity currencies (Adds detail about forthcoming China data, dollar index, updates prices)

By Steven C. Johnson

NEW YORK, Jan 20 (Reuters) - The euro fell to a five-month low against the dollar on Wednesday amid worries about Greece's ability to finance its deficit, while fear that China is trying to slow bank lending dulled demand for commodity currencies.

Analysts said an upset Republican victory for a vacant U.S. Senate seat helped push the dollar to a 4-1/2-month high against major currencies, on the view it may force Congress to rein in the deficit. For details, see[ID:nN18159712]

"The momentum clearly favors the dollar now, and the market seems willing to latch onto any reason to buy it," said Matthew Strauss, senior strategist at RBC Capital Markets in Toronto.

He said reports that Chinese banks were told to curb lending weighed on commodity currencies such as the Australian dollar, which lost 1.8 percent against the greenback .

Analysts said tighter policy may slow China's recovery and hurt commodity and other risky asset demand.[ID:nTOE60J09N]

Wall Street suffered its worst slide of the new year on the news, while the dollar and yen rose as investors who used the currencies to fund other trades were forced to buy them back.

The euro last changed hands at $1.4100 , down 1.4 percent, after earlier hitting $1.4081, a five-month low. Euro losses gained speed after it traded below its 200-day moving average, which was important support against the dollar.

The euro is down 1.5 percent this year against the dollar after falling 2.2 percent in the last three months of 2009, and analysts say worries about the finances of the euro zone's weakest economies is the main culprit.

The euro fell 1.2 percent to 128.65 yen , its lowest level in a month, and the dollar rose 0.1 percent to 91.24 yen . The dollar gained 1.2 percent to 1.0438 Swiss francs. The euro fell as low as 86.52 pence , its weakest since late August.

Worries about cash-strapped Greece's finances battered the currency on Wednesday as borrowing costs for the troubled euro zone country surged and the Greek government said it was considering all options to raise funds, including selling bonds directly to the public. [ID:nLDE60J1BU]

Greece's ballooning budget deficit, which hit 12.7 percent of gross domestic product in 2009, has sparked one of the worst fiscal crises in the euro zone since the euro was introduced.

Meanwhile, analysts said Tuesday's Massachusetts election result could force legislative compromises in the Senate that would put the brakes on fiscal spending.

The U.S. budget deficit swelled to a record $1.4 trillion last year, largely due to the hundreds of billions spent to reignite the U.S. economy after a financial crisis.

"Euro/dollar will stay under selling pressure at least in the near term," said Paul Mackel, director of currency strategy at HSBC in London. "If the market is considering whether the U.S. fiscal outlook is looking better while it's still looking (shaky) in the euro zone, that's giving conviction to be short on the euro."

Currencies from commodity producers, which depend on raw material exports for income, fell after Chinese media said banks were being told to curb lending. Australia's dollar fell 1.8 percent to $0.9077 .

The New Zealand dollar shed 2.8 percent to $0.7185, hurt by the Chinese reports and by tame inflation data that weakened the case for an imminent interest rate hike.

China reports fourth-quarter growth on Thursday. Analysts polled by Reuters expect the economy to have grown at a 10.9 percent rate, up from 8.9 percent in the third quarter. [ID:nTOE60C07D]