FOREX-Dollar, yen gain as stock tumble dents risk appetite

* Dollar, yen rally as investors seek safe-haven

* Stocks post steep losses, led by financial shares

* Euro, commodity FX tumble as risk appetite deteriorates (Adds comment, updates prices, changes byline)

By Wanfeng Zhou

NEW YORK, Oct 30 (Reuters) - The U.S. dollar rallied against the euro and a basket of currencies on Friday as a sharp sell-off in the stock market enhanced the greenback's safe-haven appeal.

Major indexes on Wall Street fell more than 2 percent, weighed down by financial shares, while data painted a mixed picture of the economy, denting market's euphoria sparked by Thursday's upbeat third-quarter economic growth data.

A deterioration in investors' appetite for risk also pushed the Japanese yen sharply higher and weighed heavily on higher-yielding, commodity currencies including the Australian and New Zealand dollars.

"The main driver is equities," said Nick Bennenbroek, head of currency strategy at Wells Fargo Bank. "You're still seeing the relationship between the dollar and the equity market holding intact."

In afternoon trading, the euro fell 0.6 percent to $1.4741. The euro zone currency was down 1.7 percent on the week, so far on pace for its worst weekly performance since mid-April.

The ICE Futures dollar index <.DXY>, a measure of the greenback's value against six major currencies, rose 0.4 percent to 76.250 and was up 1 percent on the week, its best weekly gain since June.

The dollar fell 1.5 percent against the yen to 90.03. The yen also gained as the Bank of Japan said it would stop buying Japanese corporate bonds and commercial paper, starting a withdrawal process from the credit market. See [ID:nT32693].

The yen also rose sharply against other major currencies. The euro fell 2.2 percent to 132.66 yen . Sterling dropped 2.3 percent versus the yen , the Australian dollar lost 3 percent and the New Zealand dollar tumbled 3.7 percent .

(Additional reporting by Gertrude Chavez-Dreyfuss; Editing by Chizu Nomiyama)