World oil prices retreated Tuesday on profit-taking and as the market was rattled by sliding European equities and the strengthening dollar, traders said.
New York's main contract, light sweet crude for delivery in December dipped 84 cents to 77.29 dollars a barrel.
Brent North Sea crude for December delivery shed 73 cents to 75.82 dollars per barrel.
Traders took their cue from the strengthening greenback, which makes dollar-priced crude more expensive for buyers holding foreign currencies, dampening oil demand.
In late morning London deals, the European single currency hit a one-month low of 1.4636 dollars compared with 1.4772 dollars late in New York on Monday.
At the same time, the oil market was dragged lower as European stock markets tumbled and Britain unveiled a major shake-up of the banking industry, analysts said.
"Oil continues to hold above 77 bucks (for New York crude) but the attempted rally yesterday ran into quicksand," said analyst Simon Denham at Capital Spreads on Tuesday.
"The moves higher are still very aggressive but they are now running into general drifting lower during periods when not much is going on."
Crude futures had rebounded sharply on Monday, buoyed by a weaker dollar and positive US and Chinese economic data that bolstered hopes of stronger demand in the two biggest energy-consuming nations.
On Monday, the Institute of Supply Management said its factory index, also known as the purchasing managers index, grew for a third consecutive month in October with a reading of 55.7 percent.
It was stronger than market expectations for a reading of 53 percent and the highest rate of growth since April 2006. Any number above 50 indicates growth.
Among the sub-indexes in the survey, the employment index was 53.1 percent, marking a sharp turnaround from last month's 46.2 percent and suggesting that factories are starting to add jobs.
The US is the world's biggest energy user and a recovery in its economy is seen as key to lifting global oil demand, which has been hit by the global financial crisis.
In addition, data showed Monday that the HSBC China Manufacturing PMI, or purchasing managers index, rose to an 18-month high of 55.4 in October from 55.0 in September, above the breakeven reading of 50 that indicates expansion.
A separate official Chinese PMI, compiled by the National Bureau of Statistics, showed manufacturing activity rose to 55.2 in October -- the highest since May 2008 -- from 54.3 in September.
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