FOREX-Yen, dollar gain as markets turn risk-averse

* Yen rallies, dollar index inches higher as stocks slide

* Aussie down as CPI dents view of bigger rate hike

* U.S. durables data modestly boosts risk sentiment (Updates prices, adds quotes, U.S. data, changes byline, dateline; previous LONDON)

By Gertrude Chavez-Dreyfuss

NEW YORK, Oct 28 (Reuters) - The yen and U.S. dollar gained on Wednesday as weakness in equities amid doubts about global growth prospects rekindled safe-haven demand for both currencies and prompted traders to reduce exposure to riskier assets.

A slide in European shares, led by declines in the banking and energy sectors, accelerated a sharp fall in the high-yielding Australian dollar that had been triggered by lower-than-expected domestic inflation data. At the same time, that boosted the low-yielding yen and dollar, which tend to benefit when markets shun riskier trades.

"It's a 'risk-off' market. The market toward the month-end is a bit more circumspect about the growth prospects of the global economy," said Matthew Strauss, senior currency strategist at RBC Capital Markets in Toronto.

"And the market is more than willing to take profits on riskier assets and on the currency side the dollar and yen are gaining."

He still believes though that investors have yet to turn "full-blown bearish" on the economy, and that the current move is just a case of profit-taking after a long and strong period of gains.

Data showing solid orders for U.S. durable goods modestly improved sentiment on the economy, although the market remained generally risk-averse. See [ID:nN28295073].

Analysts said the Australian consumer price inflation data was one of the triggers for the fading in risk sentiment. While the inflation number was generally in line with forecasts, analysts said it was not strong enough to justify expectations for an aggressive interest rate increase next week. . [ID:nSYD541217]

This followed surprisingly weak U.S. consumer confidence figures on Tuesday.

Benchmark European shares fell 1.4 percent <.FTEU3>, with banking shares significantly underperforming as Irish banks slid sharply, while U.S. equity futures are indicating a lower open.

Weaker shares prompted traders to buy the yen and dollar. Against the yen, the dollar was down 0.7 percent at 91.15 yen in early New York trade, retreating from a one-month high of 92.33 yen hit on EBS the previous day.

The euro fell 0.7 percent to 134.97 yen.

The ICE Futures dollar index was up 0.1 percent at 76.188 <.DXY>, while the Australian and New Zealand dollars were each down more than 1 percent versus the greenback.

(Additional reporting by Jamie McGeever in London; Editing by Chizu Nomiyama)