* 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's rate announcement on Wednesday awaited (Adds quotes, updates prices, changes byline, changes dateline, previous LONDON)
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 U.S. stock futures signaled a
lower open after disappointing results from UBS
"We saw investors focus once again on the health of the banking sector and that of course has tended to undermine riskier assets," 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," he added.
In early New York trading, the ICE Futures U.S. dollar index <.DXY>, a measure of the greenback's value against a basket of six major currencies, rose 0.6 percent to 76.728, after earlier climbing as high as 76.817, its highest level since early October.
The euro fell about a full percent on the day, hitting a
four-week low of $1.4627
Some attributed losses in banks 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 fell 0.9 percent
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.
"Year-end position liquidation could also prove disruptive to capital markets as investors crystallize this year's gains," said Geoffrey Yu, currency strategist at UBS in London.
WARY AHEAD OF FED, JOBS REPORT
Traders remained wary ahead of big scheduled events 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 also hold policy meetings later in the week. [ECB/INT] [BOE/INT] Key U.S. 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, but many analysts say the Fed is unlikely to change the wording of its pledge to keep rates low for an "extended period". [FED/R]
"The banking system is still very soft globally. 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," said Andrew Busch, global FX strategist at BMO Capital Markets in Chicago.
The Australian dollar fell 0.9 percent against the U.S.
dollar to US$0.8954
Markets were still pricing in the chance of a 25 basis point increase in December, albeit a reduced chance.
Sterling tumbled to a one-week low against the dollar after
the UK Treasury announced a shake-up of British banks, which
raised concerns about the financial sector. The pound was last
down 0.5 percent at $1.6298
(Additional reporting by Naomi Tajitsu in London) (Editing by Theodore d'Afflisio)