* Euro falls; dollar index hits one-month high
* Stocks down on bank worries, hitting risk appetite
* UK bank shake-up briefly hits sterling; Aussie down
* Fed rate announcement awaited
(Adds quotes, updates prices, changes byline)
By Gertrude Chavez-Dreyfuss
NEW YORK, Nov 3 (Reuters) - The U.S. dollar climbed to a
one-month high against a basket of currencies on Tuesday as
concerns about the global banking sector and equity losses
re-ignited safe-haven demand for the greenback.
European shares <> fell and Wall Street stocks traded
lower after disappointing results from UBS <UBSN.VS> and a
shake-up of UK banks Lloyds <LLOY.L> and Royal Bank of Scotland
<RBS.L> prompted investors to cut back on risky trades.
That hurt currencies such as the euro that are viewed as
proxies for risk appetite in the current environment.
"Sentiment on the financial sector in Europe was weak and
that pressured the euro and the pound earlier and contributed
to the overall strength in the dollar," said Vassili
Serebriakov, senior currency strategist, at Wells Fargo in New
York.
In early afternoon trading, the ICE Futures U.S. dollar
index <.DXY>, a measure of the greenback against a basket of
six currencies, rose 0.2 percent to 76.456, after earlier
climbing as high as 76.817, its highest since early October.
The euro fell 0.5 percent to $1.4692 after hitting a
four-week low of $1.4627 <EUR=>, according to Reuters data.
News about the European Commission's estimates of bank
losses renewed anxiety over the sector's health. The EU
Commission quoted results of stress tests in the banking
sector, published in early October, which said losses could
amount to 400 billion euros ($585.2 billion) in 2009-2010.
The euro also declined 0.5 percent <EURJPY=R> versus the
yen to 132.60, while the dollar was little changed at 90.29 yen
<JPY=>.
Some traders said profit-taking on risk assets, already
seen in equities, could materialize ahead of funds'
book-closings as the year-end approaches. That may offer
additional boost to the dollar.
"People are starting to slowly remove risk from the table,"
said Brian Kim, currency strategist with UBS in Stamford,
Connecticut. "We could see a little support for the dollar
heading into year end."
WARY AHEAD OF FED, JOBS REPORT
Traders remained cautious ahead of a slew of central bank
meetings this week. The U.S. Federal Reserve starts a two-day
policy-setting meeting on Tuesday and the European Central Bank
and the Bank of England hold policy meetings later in the week.
[] []
The U.S. October non-farm payrolls report is also due on
Friday.
The Fed, which will announce its decision on Wednesday, is
expected to keep its benchmark interest rate unchanged near
zero. Investors also expect no big changes to the wording in
its statement, which should reiterate that the Fed will keep
rates low for an "extended period." [].
Shaun Osborne, chief currency strategist, at TD Securities
in Toronto said if the Fed makes no change in wording on
interest rates, and signals stimulus will stay for a long time,
it would weigh on the dollar and boost higher-yielding assets.
The Australian dollar fell 0.2 percent against the U.S.
dollar to US$0.9012 <AUD=D4> after the Reserve Bank of
Australia raised its cash rate for the second straight month,
as expected, but left markets guessing if it would raise rates
again as soon as December. []
Sterling earlier in the session hit a one-week low against
the dollar before recovering after the UK Treasury announced a
shake-up of British banks, which raised concerns about the
financial sector. The pound was little changed at $1.6399
<GBP=>.
(Additional reporting by Wanfeng Zhou; Editing by Andrew
Hay)
