* Dollar index declines for third straight session
* Weaker U.S. GDP, home sales data pressure greenback
* Aussie, kiwi jump on hopes for Chinese stimulus (Updates to late market action, adds quote)
By Richard Leong
NEW YORK, Dec 22 (Reuters) - The dollar slipped against a basket of currencies on Tuesday as more traders booked profits on bullish greenback bets following the Federal Reserve's interest rate increase last week and a steep drop in existing home sales in November.
Commodity-linked currencies including the Australian and New Zealand dollars rose against the greenback as oil prices stabilized above 11-year lows and investors hoped for more official action to support growth in China.
"As soon as Fed's rate hike was out of the way, we saw a lot of investors getting out of their long dollar positions," said Sireen Harajli at Mizuho Corporate Bank in New York.
The Fed's signal to raise rates at a gradual pace over next few years stoked further selling in the dollar, Harajli said.
The dollar index, which measures the greenback against six currencies, fell 0.21 percent at 98.163 .DXY . It declined three straight sessions and briefly broke below the 50-day moving average at about 98.02.
The greenback fell 0.1 percent to 121.00 yen JPY= after touching its lowest level in a week earlier.
"The trend is still dollar positive as long as the economy performs," said Brian Dangerfield, currency strategist at RBS (L:RBS) Securities in Stamford, Connecticut.
U.S. gross domestic product grew at a 2.0 percent annual pace in the third quarter, a tad slower than the 2.1 percent rate reported last month, the Commerce Department said. Economists polled by Reuters had forecast a downgrade to 1.9 percent. urn:newsml:reuters.com:*:nLNNMNEB0Q
There were signs that U.S. economic growth might struggle to gain traction. A private report showed existing home sales plunged 10.5 percent in November, their steepest drop since July 2010. urn:newsml:reuters.com:*:nL1N14B0PB
The euro strengthened again, brushing off the indecisive outcome of the Spanish elections over the weekend and its possible risk to economic reforms in the euro zone's fourth-biggest economy.
The single currency was up 0.5 percent at $1.0963 EUR= and up 0.3 percent at 132.68 yen EURJPY= .
Among other major currencies, the Aussie and Kiwi dollars both gained more than 0.5 percent to $0.7229 AUD=D4 and $0.6806 NZD=D4 , respectively.
There were hopes of steadier prices for oil and other industrial commodities including iron ore, Australia's largest export, after the government announced a series of reforms at a major meeting of China's Communist leadership, analysts aid. urn:newsml:reuters.com:*:nL3N14A35X
China's yuan CNH= gained marginally against the dollar for a second day with its offshore rates 0.3 percent higher at 6.5281 yuan per dollar CNH= , halting falls that have taken it to its weakest since a devaluation in August.