FOREX-Yen, U.S. dollar rise as risky assets retreat

* Yen rallies, dollar index edges higher as stocks slide

* Aussie down as CPI dents view of bigger rate hike

* U.S. new home sales fall, lowers risk appetite

* Norges Bank raises interest rates to 1.5 pct (Updates prices, adds quote)

By Gertrude Chavez-Dreyfuss

NEW YORK, Oct 28 (Reuters) - The yen and U.S. dollar gained on Wednesday as doubts about global growth pushed stocks lower, rekindling safe-haven demand for both currencies.

The yen and dollar were boosted as investors shunned the Australian dollar, which fell after Australian inflation data suggested Australia's central bank was unlikely to tighten interest rates sharply. The yen and dollar tend to benefit when markets shun riskier assets.

In addition, the U.S. data showing an unexpected fall in new home sales for September added to nervousness in the market and pushed the dollar even higher. For details, see [ID:nN28296063].

"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 housing number followed surprisingly weak U.S. consumer confidence figures on Tuesday and has offset a solid U.S. durables goods report. [ID:nN28295073].

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 in risky trades.

Analysts said the Australian consumer price inflation data was one of the triggers working against 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]

In midday trading, the Australian dollar was down 1.5 percent on the day versus the greenback at US$0.9028 . Overnight interest rate swaps markets showed investors are now looking for no more than a 25 basis point rate rise at the Reserve Bank of Australia's meeting next week.

"For all of its stern rhetoric of late, let's not forget that the RBA still needs reason to lift rates in this deflationary environment even when growth appears locally robust ," said Andrew Wilkinson, senior market analyst at Interactive Brokers in Greenwich, Connecticut.

The New Zealand dollar fell in sympathy with the the Aussie dollar, trading 1.4 percent lower at US$0.7325.

The U.S. dollar was down 0.8 percent against the yen 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 and was down 0.2 percent at $1.4779.

The ICE Futures dollar index was up 0.1 percent at 76.177<.DXY>.

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. See [ID:nLS330178].

The euro was down 0.1 percent versus the Norwegian crown at 8.3885 , while the dollar was up 0.6 percent at 5.6777 .

(Additional reporting by Wanfeng Zhou in New York; Editing by Kenneth Barry)