European stocks rose and the dollar nudged up from six-month lows against the yen yesterday in trade made hesitant by fears of deadlock in the U.S. presidential election and ahead of key jobs data due on Friday.

Crude oil crept back up, with U.S. light crude rose 52 cents to $52.28 a barrel, a reminder of the painful backdrop high energy costs paint for European shares and the economy in general. This extended a jump that helped prices recover from Friday’s $50.47 low, the weakest since Oct. 5.

Stock index futures point to a flat opening on Wall Street. The dollar hovered around session highs at $1.2750 per euro and above 106.35 yen as the greenback held on to the early gains amid expectations that figures would show U.S. manufacturing was stronger than the euro zone.

The Reuters Eurozone Purchasing Managers’ Index slipped for a third consecutive month to 52.4, still above the 50 watermark dividing contraction from growth from 53.1 in September. It was hit by high oil prices, a slowing global economy and a rising euro.

The Institute for Supply Management’s manufacturing index, due at 1500 GMT, is expected to show that U.S. manufacturing accelerated in October.

But even the prospect of a sustained recovery was overshadowed by the dollar’s fundamental weakness given the massive U.S. trade deficit. The tight U.S. election was putting traders off long-dollar positions. A Reuters poll on Sunday showed that President Geroge W. Bush and his Democrat rival Senator John Kerry both had 48 percent of the vote.

“The market tone is still bearish for the dollar and in the very near-term, the focus is not so much on who will win the election but whether it will be fair and the results announced promptly,” said Kaoru Kondo, chief analyst at Fisco.

U.S. Treasury prices were little changed after U.S. consumer spending rose by an expected robust 0.6 percent in September from a revised 0.1 percent decline in August.

Benchmark 10-year Treasury notes were yielding 4.05 percent, compared with late New York’s 4.03 percent. Comparable euro zone government bonds were up 1.8 basis points at 3.871 percent.

European shares rose with the FTSEurofirst 300 index of leading European shares up 0.6 percent at 1,004.16 points, led by an 0.9 percent gain on the FTSE 100. Oil stocks led the gains.

“I’m not sure it would be fair to say we are still seeing value (in oil stocks) but we are still overweight the sector,” said Juliet Cohn, who manages a $3 billion fund of non-U.S. equities for Principal Global Investors.

“Obviously there are a number of factors keeping the oil price high and we don’t see those alleviating in the short term,” she said.

On the flip side, ABN AMRO was a big loser after it said operating performance was expected to be weaker this year. Shares in the Dutch bank fell 1.2 percent to 18.52 euros.

U.S. blue-chip stocks finished higher on Friday with the Dow 0.23 percent at 10,027.47.

Tokyo’s Nikkei average fell 0.34 percent on Monday on selling of exporters such as Toyota Motor Corp., which posted a 12.8 percent rise in first-half profit, and wariness ahead of the U.S. presidential election.

Other Asian stock markets followed Tokyo’s lead, trapped in narrow ranges, with high oil also weighing heavily on investor sentiment.

Spot gold regained its poise to $428.40/9.10, up slightly from $428.15/$428.90 last quoted in New York on Friday.

<B>Raj Rajendran</B>