* Dollar and yen rise as stocks retreat
* Dollar earlier hits 2009 trough vs basket of currencies
* Aussie dollar rallies on rate hike expectations (Adds detail, updates prices, changes byline, changes dateline, previous LONDON)
By Wanfeng Zhou
NEW YORK, July 28 (Reuters) - The dollar and yen rose on Tuesday as weakening global stock and oil prices prompted investors to shun riskier investments.
Benchmark U.S. stocks indexes opened lower and oil prices fell. European shares declined after posting their highest close since November on Monday.
Optimism about the global economic outlook had earlier pushed the dollar index to its weakest level this year against a basket of currencies.
But it erased its losses as investors turned cautious following after a handful of major U.S. companies reported downbeat results, including Office Depot Inc, which posted a bigger-than-expected loss.
"We're seeing something of a pullback here from the rally in both equities and commodities of recent weeks," said Michael Woolfolk, senior currency strategist at the Bank of New York Mellon in New York.
"This could reflect a wait-and-see attitude towards developments for economic releases as well as another wave of earnings announcements later this week," he added.
In early New York trading, the dollar fell 0.6 percent to 94.59 yen while the euro dropped 0.8 percent to 134.48 yen.
The euro was down 0.2 percent at $1.4218, having climbed as high as $1.4303, its highest since early June, according to Reuters data.
"The euro has failed to hold above this ($1.43) level with the slightly softer tone of stock markets in Europe draining some of the enthusiasm for risk," said Jane Foley, research director at FOREX.com.
The ICE Futures U.S. dollar index, which measures the performance of the greenback versus a basket of six currencies, fell to a low of 78.315, the lowest since December. It was last little changed at 78.661.
Markets were wary ahead of U.S. consumer confidence data at 10 a.m. (1400 GMT), which is expected to show a drop to 49.0 in July from 49.3, after strong U.S. home sales data on Monday fueled recovery hopes.
Traders will also watch the outcome of a sale of $42 billion of two-year U.S. government paper later in the day. A record $115 billion in new debt is being auctioned this week, including $96 billion in new coupon auctions.
The Australian dollar rallied to its highest level against the U.S. currency since last September after Australia's central bank governor fueled speculation interest rates may rise soon.
The Aussie dollar also hit a seven-week high against the yen of 79.29 yen.
Reserve Bank of Australia Governor Glenn Stevens said risks to the economy were now more balanced and that low interest rates could inflate a housing bubble, the clearest sign yet that it was likely done with easing policy.
"This ... reinforces the view that the RBA is likely to be the first G10 central bank to hike," analysts at CitiFX wrote in a research note. (Additional reporting by Tamawa Desai; editing by W Simon)