By Gilbert Kreijger

AMSTERDAM (Reuters) - The U.S. economy might fall into a recession if U.S. consumption is hit by rising mortgage costs and declining housing prices, Robeco's Chief Executive told Reuters on Tuesday.

"If people cannot pay their mortgages anymore, and housing prices are falling, then you have a consumption problem in the U.S., and that translates into a declining economy," Robeco's CEO George Moller said in an interview.

Dutch asset manager Robeco, owned by Dutch privately-owned Rabobank <RABN.UL>, manages about 150 billion euros ($221 billion) in assets worldwide.

"How bad it will be, we don't know. It could be that China keeps up demand," he said about the impact of a slowing U.S. growth rate on the global economy.

The U.S. economy could also face stagflation -- a situation where growth stagnates but prices keep rising -- as Moller expected commodities, such as oil, to continue to become more expensive.

Slowing growth would also stem from banks faced with less room to offer credit to consumers and companies as they are forced to take off-shore assets back on their balance sheets due to the credit crisis, limiting their solvability, said Moller.

Some banks, such as HSBC Holdings Plc <HSBA.L> last week, have put assets, mostly bank debt and asset-backed securities, back on their balance sheet as demand for these securities shriveled due to U.S. subprime problems and a subsequent credit squeeze.

U.S. President George W. Bush acknowledged on Tuesday that the U.S. economy faced serious issues, citing the credit crunch and the home-building industry but said the country's economic fundamentals were strong.

Moller said U.S. economic problems and the credit squeeze could also hit Europe's economy, as European banks will also have less room to offer credit and a strong euro versus the dollar could limit demand for European products.

The euro reached an all-time high at $1.4966 two weeks ago, but has retreated since then to $1.4755 by 12:20 p.m. EDT, and Moller expected a stabilization in the exchange rate for the next few months.

He expected oil and commodity prices to rise on a medium to long term as scarcity would keep pushing up prices.

"All minerals that are related to solar power, like silicon, are in demand. Prices are already rising," said Moller.

"If I could invest in stocks, I would choose companies that focus on sustainability and alternative energy sources. Water and energy are scarce. Everything that is related to climate change -- building dikes, bridges -- will build up steam," he said.

Moller also favored investing in non-cyclical sectors or go short to make money in current volatile markets. He also remained positive about emerging markets, singling out Turkey.

"Turkey has internal strength and it is not so overpriced," Moller said.