From your ost it sounds possible that the dog has either had things taken from him, by children before, (maybe one that was similar to your niece) or thought she was going to take his rope, or maybe has had a bad experience with a child. Hard when you don't know their history. If he didn't growl, it is also possible he has ben told off for growling in the past, so now won't do it. Does he growl at other times?

I would work to cover all bases and, as JoP has said, be veyr careful of your niece around him and if he seems uncomfortable at all, send her away from him.

Start by when your niece visits, giving your dog some treats at regular intervals while she is there. (you giving the treats, not your niece) That way he will start to think, that it is good when she visits, as he gets extra treats.

Then, teach him to give you whatever he has in return for a treat, then when he has eaten the treat, give him whatever it was back again. That way he learns, that people approaching when he has something is a good thing, as is them taking it. Practice with lots of different people, but not your niece yet.

Then, when he seems more relaxed around your niece, get her to give him a few treats when she visits, but make sure you are with her at all times, and do be careful about it.

Once the dog is totally comfortable with your niece and will approach him by heimself, practice her exchanging objects he has for a treat, but ONLY when he is totally relaxed about her prescence. This might take several months.

If he seesm uncomfortable at any step, take it back a step until he is OK again.

You might have to accept that he will never be totally OK about your niece, so do be prepared for that.