* 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 <.FTEU3> fell and Wall Street stocks traded
lower after disappointing results from UBS
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
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
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. [ECB/INT] [BOE/INT]
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." [FED/R].
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
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
(Additional reporting by Wanfeng Zhou; Editing by Andrew Hay)