* Dollar index <.DXY> rises 0.5 pct
* U.S. stocks to show rise in crude, gasoline - Reuters poll
(Updates throughout with prices, data, comment)
By Christopher Johnson
LONDON, Nov 3 (Reuters) - Oil fell more than $1 per barrel
towards $77 on Tuesday as the dollar rose against a basket of
currencies and as stock markets slipped in Europe and Asia.
The dollar index rose 0.5 percent as the euro <EUR=> hit a
four-week low. Oil often weakens when the dollar rises, partly
because crude is priced on international markets in the U.S.
currency.
European shares <> fell more than 2 percent to a
one-month low on Tuesday, struggling as news of a shake-up in
the British banking sector made investors wary of risky assets.
U.S. crude for December <CLc1> tumbled $1.10 per barrel to a
low of $77.03 after hitting an early high of $78.46 and settling
up $1.13 on Monday. By 1100 GMT, the December contract stood at
$77.34, down 79 cents.
London Brent crude futures <LCOc1> eased 71 cents to $75.84
a barrel.
"The strength of the dollar is probably the most important
factor driving commodities in general and oil in particular,"
said Commerzbank commodities analyst Eugen Weinberg.
"Equity markets are down in Asia and Europe and there is a
feeling that recent price increases may have been overdone, that
despite the economic recovery, the current oil supply and demand
situation probably does not justify the recent rise in prices."
U.S. crude futures rose to their highest level this year at
$82 per barrel on Oct. 21, after turning positive on a rolling
12-month basis in the middle of last month for the first time
since October 2008, raising the risk of commodity-led inflation.
OIL DATA
Traders were awaiting news of oil inventories in the United
States, the world's largest energy consumer.
Industry group American Petroleum Institute will issue its
weekly report on U.S. inventories at 2130 GMT, while the U.S.
government Energy Information Administration will issue its
data on Wednesday.
A Reuters poll of analysts forecast weekly U.S. inventory
data for the week to Oct. 30 would show a 1.5 million-barrel
build in crude stockpiles, a 500,000-barrel draw in distillates
and a 300,000-barrel rise in gasoline inventories. []
Oil got a boost on Monday after U.S. manufacturing activity
hit its highest level in 3-1/2 years last month and pending home
sales contracts unexpectedly jumped in September, easing fears
the budding economic recovery of the world's largest oil
consumer would falter. []
A separate report from the U.S. Commerce Department showed
spending on construction projects rose in September.
[]
Energy traders have closely watched economic data and
equities markets this year for signs of a turnaround in the
economic crisis that could bolster flagging oil demand.
The U.S. Federal Reserve starts its two-day meeting later on
Tuesday and while it is expected to keep rates unchanged, there
is speculation that it might drop or alter its pledge to keep
rates low for an "extended period". []
(Editing by James Jukwey)
