(Updates prices, adds details)
* US housing data drags down Wall St, European equities
* Oil falls after inventory data
* Dollar and yen rise on safe-haven bid
By Al Yoon
NEW YORK, Oct 28 (Reuters) - World stocks slipped and the dollar rebounded on Wednesday as disappointing data on the U.S. housing market raised worries about global growth, driving investors to less risky assets.
The yen and the U.S. dollar climbed as traders flocked to the two traditional havens from risk.
Oil fell below $78 a barrel after a surprise build in U.S. gasoline stocks increased doubts over demand from the world's largest fuel consumer.
Evidence the nascent rebound in U.S. housing and the general economy is sputtering has investors reassessing their bullish outlooks on global stocks, especially with the rally in one global index gaining as much as 75 percent from March lows through last week. Now data suggests businesses are holding on to cautious outlooks, and played a role in more conservative views of some widely-watched Wall Street economists.
The U.S. government reported the pace of new homes sales in September unexpectedly tumbled 3.6 percent, the first drop in six months. The surprise drop accelerated selling of equities on Wall Street, which followed European stocks lower.
Another U.S. report showed orders for durable goods rose 1 percent in September, which was higher but falling short of a "vigorous pace," said Michael Moran, chief economist at Daiwa Securities America in New York.
European shares hit their lowest close in three weeks, led by sharp falls in banking shares after Banco Santander reported a 2.8 percent fall in net profit.
"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."
Key U.S. senators near the close of trading on Wednesday reached a deal to expand a program of tax credits for Americans who buy a home, according to sources, meeting requests of bankers who claim the current credit for first-time buyers has helped stabilize the market from its three-year downturn.
The Dow Jones Industrial Average <.DJI> fell 119.48 points, or 1.21 percent, to 9,762.69. The Standard & Poor's 500 Index <.SPX> lost 20.78 points, or 1.95 percent, to 1,042.63. The Nasdaq Composite Index <.IXIC> gave up 56.48 points, or 2.67 percent, at 2,059.61.
Among U.S. financial shares, JPMorgan Chase & Co
The pan-European FTSEurofirst 300 index <.FTEU3> closed
down 1.94 percent to 980.23 points, its lowest close since Oct.
5. Banco Santander
Ireland's big banks, Allied Irish Banks
The MSCI's all-country world stocks index <.MIWD00000PUS> shed 2.14 percent to 283.31, taking the measure down 6 percent from Oct. 20, which marked a 75 percent gain from March. Japan's Nikkei <.N225> declined 1.35 percent to 10,075.05.
"The market has taken off its rose-colored glasses," said Heinz-Gerd Sonnenschein, an equity strategist at Postbank.
In foreign exchange, the yen and U.S. dollar gained with the softened outlooks on global growth and on weaker stocks.
The dollar rose 0.45 percent versus a basket of major currencies <.DXY>. The euro fell 0.66 percent to $1.4710, while against the yen the dollar declined 1.1 percent to 90.78 yen.
The yen and dollar were boosted as investors shunned the Australian dollar, which fell after Australian inflation data suggested the country's central bank was unlikely to tighten interest rates sharply.
Euro zone government bonds and U.S. Treasuries gained traction on a safety bid on the back of the U.S. new home sales report and falling equities.
Price gains for the benchmark 10-year Treasury note pushed its yield down 0.03 percentage point to 3.42 percent. Strong demand for a U.S. Treasury debt auction on Tuesday allayed concerns about the cumulative impact of $123 billion in U.S. government bond sales this week.
"With the global tone of equity markets weakening we think a bullish fixed income correction is becoming increasingly likely," analysts at Societe Generale said in a client note.
Oil fell $2.47 per barrel to $77.08.
(Editing by Kenneth Barry)