I'm English and have never heard niece used for daughter of a cousin in English - the oxford English dictionary definition indicates only the daughter of a brother or sister or brother- or sister-in-law.
How we can understand when we talk about granddauther or niece? They are not the same at all!? In this sentence - what I fave a granddaugther or niece - I think that this is important part if the information in the sentence.