* Wheat down for 2nd day, soybeans also drop * Corn firms after biggest decline in more than 4 months * Forecasts of rain in U.S. and Russia weaken * Outside markets retreat on caution before EU summit (Updates with trade in European session) HAMBURG/SINGAPORE, May 23 (Reuters) - Chicago soybeans again fell on Wednesday as a stronger dollar and weak outside markets pressured commodities, while wheat dropped for a second straight session on forecasts of rain in parts of Russian and U.S. grain producing regions. Corn rose, regaining some ground on bargain hunting and continued weather concerns after dropping around 5 percent on Tuesday, in its biggest decline since January 12. "I think wheat is being weakened by the stronger dollar, lower outside markets and better forecasts for rain in Russia and the U.S.," said Rabobank analyst Erin FitzPatrick. "We have had improved forecasts for rain in the U.S. wheat belts over the next week or so which is easing concerns about dryness there." "There has also been a better weather outlook in Russia." Chicago Board of Trade July wheat fell 2.1 percent to $6.70-3/2 a bushel at 1040 GMT, dropping for a second day after rising to its highest since Sept. 7 on a continuation chart on Monday. European benchmark wheat, the Paris November contract , was down 2.1 percent or 4.50 euros at 210.00 euros. Chicago July soybeans fell 1.2 percent to $13.64-3/4 per bushel, while July corn rose 0.2 percent to $5.98-1/2 a bushel. "The overall selloff in wheat and soybeans is also to do with what is going on in the background macro environment," FitzPatrick said. "We are seeing less support from short covering following the large recent large short position held by managed money in the CBOT wheat market." European equities ended a two-day rally and safe-haven assets such as the dollar rose on Wednesday, as investors doubted any new measures to tackle the euro-zone debt crisis would emerge from a European leaders summit and on renewed talk of a Greek exit from the euro. The euro hit a 21-month low and commodities and commodity-linked currencies all slid in cautious trading ahead of the European summit later on Wednesday which is expected to discuss contentious growth-boosting proposals. The dollar index, which measures the strength of the greenback against a basket of currencies, rose 0.3 percent, adding pressure on dollar-priced commodities. "There are concerns over slowing growth in China, which is putting pressure across the commodities complex, including soybeans, and there are forecasts of rains in some dry areas of the United States and Russia," said Lynette Tan, an analyst with Phillip Futures. "For corn, I think selling was overdone, so we could see some bargain hunting." The World Bank cut its economic growth forecast for China this year to 8.2 percent from 8.4 percent on Wednesday and urged the country to rely on easier fiscal policy that boosts consumption rather than state investment to lift activity. On the fundamental side, the welcome forecasts of rain in key grain producing regions of Russia and the United States, where dry weather stoked supply concerns last week. Rains are due in some of Russia's drought-stricken southern agricultural regions, but hot dry weather will persist in south central European Russia and the southern Volga valley, the state forecaster said on Tuesday. "Corn is holding up partly because dryness concerns remain in the U.S. despite the wetter forecasts, we will remain in a weather market for corn for several more months," FitzPatrick said. "It is still early to become overly concerned about dryness but the U.S. crop does need to start getting more rainfall." "Managed money has very large net long positions in soybeans and some speculative investors are looking to take risk off the table or take profits." There was better news from South American soybean producers also suffering from lack of rain in recent weeks. Brazil's drought-hit soybean crop, which is nearly harvested, should produce 66.7 million tonnes, the Agroconsult consultancy said on Tuesday, a figure that exceeds its prior estimate of 65.8 million tonnes for the 2011/12 crop. * Prices at 1040 GMT Product Last Change Pct Move End 2011 Ytd Pct Paris wheat 209.75 -3.00 -1.41 195.25 7.43 Paris maize 206.75 -1.75 -0.84 197.25 4.82 Paris rape 460.75 -5.75 -1.23 421.50 9.31 CBOT wheat 670.50 -15.00 -2.19 671.25 -0.11 CBOT corn 599.25 2.25 +0.38 654.75 -8.48 CBOT soybeans 1364.50 -17.75 -1.28 1207.75 12.98 Crude oil 90.87 -0.98 -1.07 98.83 -8.05 Euro/dlr 1.262681 * All grain and oilseed prices for second position. Paris futures prices in Euros per tonne, London wheat in pounds per tonne and CBOT in cents per bushel. (Reporting by Michael Hogan and Naveen Thukral; editing by Keiron Henderson)

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