* 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
* Norges Bank raises interest rates to 1.5 pct (Updates prices, adds quote, U.S. data, Norges Bank decision)
By Gertrude Chavez-Dreyfuss
NEW YORK, Oct 28 (Reuters) - The yen and U.S. dollar gained on Wednesday as doubts about global growth prospects pushed stocks lower and rekindled safe-haven demand for both currencies as traders cut exposure to riskier assets.
A slide on Wall Street and European shares, led by declines in the banking and energy sectors, accelerated a sharp fall in the high-yielding Australian dollar triggered by lower-than-expected domestic inflation data. That boosted the low-yielding yen and dollar, which tend to benefit when markets shun riskier trades.
In addition, data showing an unexpected fall in U.S. new home sales for September, when everyone thought the housing sector was on the mend, further added to nervousness in the market and pushed the dollar even higher.
"The (housing) number was surprisingly weak. I think that is going to add to the trend that we've seen recently where investors are questioning the robust pace of economic recovery going forward," said Joe Manimbo, currency trader at Travelex Global Business Payments in Washington.
"That has benefited the dollar and helped to revive its safe-haven appeal."
The soft number has offset a solid U.S. durables goods report, analysts said, given the latter data is generally volatile and sometimes doesn't capture the whole story on economic performance.
Still, RBC Capital Markets senior currency strategist Matthew Strauss believes investors have yet to turn "full-blown bearish" on the economy, and the current move is just a case of profit-taking after a long and strong period of gains.
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.
This followed surprisingly weak U.S. consumer confidence figures on Tuesday.
In mid-morning trading, the dollar was down 0.8 percent at 91.05 yen, retreating from a one-month high of 92.33 yen hit on EBS the previous day.
The euro fell 0.9 percent to 134.71 yen.
The ICE Futures dollar index was up 0.1 percent at 76.177, while the Australian and New Zealand dollars were each down more than 1 percent versus the greenback.
Also on Wednesday, the Norges Bank raised interest rates to 1.5 percent, making it the first in Europe to tighten monetary policy. The bank, however, said it sees a gradual tightening, which slightly weighed on the Norwegian crown.
The euro was down slightly versus the Norwegian crown at 8.3670 while the dollar was up 0.2 percent at 5.6520.