* Traders nervy ahead of Athens vote on austerity package
* Risk taking takes a backseat, US ISM index due this week
* Dollar index is breaking above downward trendline
* Nikkei off 1 pct; S&P 500 may test support at 200-day moving average
* Brent oil futures down 1.6 pct, falling below $104/barrel (Updates)
By Kevin Plumberg
SINGAPORE, June 27 (Reuters) - The U.S. dollar rose for a fourth consecutive session and equities fell on Monday, with investors nervous ahead of a Greek vote on unpopular austerity measures this week that may sow stronger doubts about financial stability in Europe.
Greek lawmakers began debating a 28 billion euro ($40 billion) package of measures to increase taxes and cut fiscal spending that is critical to winning a new round of international funding to keep it afloat.
A rejection of the austerity plan could greatly worsen pressures already reflected by rising Portuguese and Spanish government bond yields, possibly bringing high-risk Europe closer to a chain of sovereign defaults that would blow out interbank funding costs and place heavy stress on the region's banking system.
The risk of a credit event of this magnitude is keeping two-year U.S. interest rate swap spreads near the widest in a year and helping to lift the U.S. dollar out of a downtrend that has lasted a year.
"Contagion would run through government bond markets and via interbank funding markets," said Societe Generale economists about the implications of a "no" vote from Greece. "Such a negative scenario would threaten not only the financial stability of the euro area, but the global financial system with severe consequences for the global economy."
In the background, the world's major economies are at a vulnerable stage, as growth is slowing but inflation remains high or even accelerating in some places, eroding returns on investments and leaving investors unwilling to take many risks.
The U.S. ISM index of factory activity due on Friday may show to what extent the slowdown is temporary.
CONTAGION AND DISARRAY
The U.S. dollar index, which measures its value against six other major currencies, was trading above a downward trendline that began in June 2010. It was up 0.3 percent on the day to 75.87 , on track for a fourth straight session of gains, having risen around 4 percent since May.
The euro slid to $1.4128, down 0.4 percent and within striking distance of the June low of $1.4070 .
"Markets understand that if this package isn't passed this week, it's going to throw European debt markets into disarray and cause global contagion. That fear alone is generating a bit of selling today," said Greg Gibbs, strategist at Royal Bank of Scotland in Sydney.
Treasuries gained, with the benchmark 10-year yield slipping to a seven-month low of 2.84 percent .
In shorter maturities, the two-year swap spread over the cash market was at 28.5 basis points, not far from Friday's 29.3 basis points, the widest since July 2010.
U.S. S&P 500 index futures were down 0.2 percent
A further break below the 2011 low in March of 1,249.05 would probably attract more selling.
Japan's Nikkei share average closed down 1 percent , with technology equipment makers the biggest drag on the index.
The MSCI index of Asia Pacific stocks outside Japan was down 0.9 percent , with technology and commodity-related shares the biggest losers.
Hong Kong's Hang Seng index fell 0.7 percent , though the China Enterprises index of mainland stocks bounced from intraday lows after posting the biggest daily percentage gain in a year on Friday.
Asia is home to some of the most well-capitalised banks in the world, though investors kept selling shares of Chinese banks, many of whom are trading at single-digit price-to-earnings ratios based on 12-month expectations, Thomson Reuters StarMine showed.
China Construction Bank's Hong Kong-listed shares were down 0.9 percent , underperforming the broad market, and Industrial and Commercial Bank of China was down 0.3 percent .
The financial sector globally was trading at 9.5 times its 12-month forecasts for earnings, the second cheapest valuation of all the sectors, right in front of energy stocks.
U.S. crude kept a bearish trend in place, with the August
future falling 0.9 percent to $90.26 a barrel
Commodities have been the weakest link among asset classes vulnerable to a selloff in the face of slowing in industrial activity globally. Oil prices have been slashed by a fifth since May. ($1 = 0.698 Euros) (Additional reporting by Ian Chua in SYDNEY; Editing by Richard Borsuk)