* Euro up 0.2 pct at $1.4314 <EUR=>
* Euro dips briefly vs dlr after Moody's cuts Greece
* Rise in U.S. yields, BOJ remarks support dlr/yen
* Eyes on U.S. GDP, U.S. existing home sales
(Adds quote, updates prices)
By Tamawa Desai
LONDON, Dec 22 (Reuters) - The dollar eased against the euro on Tuesday but remained well-supported after hitting a two-month high against the yen as U.S. bond yields surged on expectations for U.S. economic growth.
The euro briefly trimmed gains against the dollar after U.S. ratings firm Moody's cut Greece's rating by one notch to A2 from A1. [ID:nLDE5BH149]
Concerns about the problems surrounding peripheral euro zone countries had weighed on the euro, and particularly Greece, whose sovereign debt rating was downgraded by Fitch Ratings and Standard & Poor's earlier this month.
But reaction to the Moody's Investors Service decision was limited. "The move was not a surprise given what Fitch and S&P had done. The next crucial step is for Greece to outline credible steps to deal with its deficit," said Lee Hardman, currency economist at Bank of Tokyo-Mitsubishi UFJ.
"This will continue to be a big structural negative for the euro that will remain in place over the medium term," he said.
The euro briefly dipped 20 ticks to around $1.4302 after Moody's announcement. By 1000 GMT, it was up 0.2 percent on the day at $1.4314, supported by European corporate and Middle Eastern bids around $1.4300/10, traders said.
A rise in equity markets -- with European shares <.FTEU3> up 0.6 percent on the day following Asia and Wall Street overnight -- also pressured the dollar.
Sterling fell to a two-month low of $1.6007 <GBP=D4> after third quarter UK gross domestic product was revised up less than expected to a 0.2 percent contraction. Sterling was last down 0.2 percent at $1.6010. <ECON>
The yen fell to a 2-month low against the dollar during Asian hours, as expectations for stronger U.S. growth boosted U.S. Treasury yields and further widened the spread between short-term U.S. and Japanese government bond yields.
The spread between the yields on the U.S. two-year note <US2YT=RR> and Japan's two-year bond <JP2YTN=JBTC> has widened to about 70 basis points from 48 bps at the start of the month.
"With the dollar showing signs of life, expect carry trade funding to switch to the yen," said Chris Turner, head of FX strategy at ING.
The dollar was up 0.1 percent at 91.31 yen after touching 91.49 yen <JPY=> on trading platform EBS, its strongest since late October.
But the upside was capped by Japanese exporter offers. There were also options-related offers around 91.50 yen, traders said.
Bank of Japan Governor Masaaki Shirakawa said on Monday the BOJ was ready to act promptly to provide funds to beat deflation and would maintain the current "effective zero interest rates".
But on Tuesday, he said the economy would be destabilised if the central bank guided monetary policy based on short-term price movements alone, and expectations of prolonged monetary easing could lead to asset bubbles accelerating. [ID:nTOE5BL089]
Traders will keep an eye on a final estimate of third quarter U.S. gross domestic product due at 1330 GMT, likely to confirm an annual 2.8 percent growth rate. <ECON>
Of greater interest may be U.S. existing home sales for November at 1500 GMT. "The test is whether the dollar continues to capitalise on positive signals from the U.S. economy," Daragh Maher, deputy head of global FX at Calyon, said in a note.
The dollar index <.DXY>, a measure of its performance against six other major currencies, was down just 0.1 percent at 77.948, nearing a high of more than three months at 78.144.
(Editing by Ruth Pitchford)