* Euro falls; dollar index hits one-month high
* Stocks down on bank worries, hitting risk appetite
* UK bank shake-up stings sterling; Aussie down after RBA
* Federal Reserve rate announcement, payroll data, awaited (Adds quotes, updates prices)
By Wanfeng Zhou
NEW YORK, Nov 3 (Reuters) - The U.S. dollar rose to a one-month high against a basket of currencies on Tuesday as concerns about the global banking sector and weaker equity markets boosted the greenback's safe-haven appeal.
European shares fell and Wall Street stocks traded lower after disappointing results from UBS and a shake-up of UK banks Lloyds and Royal Bank of Scotland prompted investors to cut back on risk.
"We saw investors focus once again on the health of the banking sector," said Omer Esiner, senior market analyst at Travelex Global Business Payments in Washington. "Stocks were generally lower and that has rekindled demand for safe-haven, low-yielding assets like the dollar and the Japanese yen."
In midday trading, the ICE Futures U.S. dollar index, a measure of the greenback against a basket of six major currencies, rose 0.4 percent to 76.580, after earlier climbing as high as 76.817, its highest since early October.
The euro fell 0.8 percent to $1.4656 after hitting a four-week low of $1.4627, according to Reuters data.
Some analysts attributed losses in bank shares and the euro partly to European Commission estimates of bank losses renewing 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 dropped 0.8 percent to 132.35 yen while the dollar was little changed at 90.29 yen.
Some traders said profit-taking on risk assets, already seen in equities, could materialize ahead of funds' book-closings as the year-end approaches and that this may offer an 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 wary ahead 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. U.S. October jobs data is due on Friday.
The Fed, which will announce its decision on Wednesday, is expected to keep its benchmark interest rate unchanged near zero. Investors will focus on the interest rate outlook, and many analysts say the Fed is unlikely to change the wording of its pledge to keep rates low for an "extended period."
Andrew Busch, global FX strategist at BMO Capital Markets in Chicago, said the global banking system remains fragile and growth in the world economy is still at very low levels.
"I don't think the Fed is going to be in a big hurry to do anything about interest rates going forward and certainly in their language I don't expect any changes," he said.
Should the Fed keep its rate outlook stable, the dollar may see renewed selling pressure as the prospect of prolonged, low U.S. interest rates prompts traders to buy currencies with higher yields.
The Australian dollar fell 0.5 percent against the U.S. dollar to US$0.8987 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 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 last little changed at $1.6386. (Editing by Andrew Hay)