* Euro steady; worries on Ireland, wider debt crisis weigh
* Strong Chinese trade data marginally helps risk currencies
* But expectations of Chinese rate hike overwhelm
By Jessica Mortimer
LONDON, Dec 10 (Reuters) - The euro was steady against the dollar on Friday, staying soft on concerns over the sovereign debt crisis in the euro zone while talk of the possibility of more monetary tightening in China dampened appetite for risk.
Strong Chinese export and import figures helped commodity-linked currencies like the Australian dollar a little, but gains were limited as the better data also increased the risk of an interest rate hike.
Sentiment towards the euro remained shaky, after Fitch ratings agency slashed Ireland's rating by three notches to BBB+ on Thursday, pointing to the fiscal costs of restructuring.
The euro was steady at $1.3239, staying above a low of $1.3164 on trading platform EBS on Thursday, with traders saying it was helped by reported demand from Middle East accounts around $1.3220-30.
"The euro has held up surprisingly well given the poor news coming out of Europe. Without further momentum in bad news we are likely to see more consolidation," said Carl Hammer, currency strategist at SEB in Stockholm.
He added that a rate hike in China would be negative for risk appetite, but probably only in the short term as a strong Chinese economy is still a positive for global growth.
Ireland's government will seek parliamentary approval for an 85 billion euro IMF/EU rescue package next week, though there were concerns about political infighting as the opposition Labour Party pledged to vote against it.
Traders say no end is in sight for the debt crisis with European leaders now clashing over the idea of joint euro zone bonds. French President Nicolas Sarkozy and Chancellor Angela Merkel meet in Freiburg on Friday to prepare joint Franco-German positions for next week's EU summit.
The euro remains on a downward trend as intraday highs have been getting lower since Monday.
The next key target for the euro is seen at $1.3150, followed by its 200-day moving average around $1.3115. Traders said the euro may fall back to its December low of $1.2970 in the coming weeks.
DOLLAR DIPS
The dollar index, which tracks the greenback's performance against a basket of major currencies, dipped 0.1 percent to 79.993, struggling to break through the 80.00-81.50 barrier that capped its November rally.
The dollar was off a high of 80.405 reached earlier this week as healthy demand at a 30-year auction of U.S. Treasuries on Thursday pushed U.S. yields down after a recent spike that boosted the appeal of the greenback.
The Australian dollar rose 0.2 percent to $0.9858, though expectations of Chinese tightening kept the growth-linked currency on a leash and it stayed away from Tuesday's 3-½ week high of $0.9966.
Traders said thin year-end volumes could make for a choppy session.
"The market is getting thin, making prices moves susceptible to big flows. This is a market where you shouldn't expect too much logic," said a trader at a U.S. bank.
Against the Japanese currency, the greenback was steady at 83.69 yen
The greenback's repeated failure since late last month to take out resistance around 84.40 yen is encouraging many traders to take profits near that level, leading to expectations that its 83.50-84.50 range will persist for now.
"There are heavy sell orders above 84 yen. As it's getting difficult to build up new positions ahead of the Christmas holidays, the dollar is unlikely to break above that resistance unless there are further rises in U.S. bond yields," said a Japanese bank trader in Tokyo.
(Additional reporting by Hideyuki Sano in Tokyo; Editing by Ruth Pitchford)