NYMEX-US crude dips on France downgrade, but Mideast woes limit fall

SEOUL, Nov 20 (Reuters) - U.S. crude oil futures eased on

Tuesday as the U.S. dollar firmed against the euro after Moody's

downgraded France's sovereign rating, but the fall was limited

by festering tensions in the Middle East.

FUNDAMENTALS

* U.S. crude oil had dropped 29 cents to $88.99 a

barrel by 0031 GMT, after settling up $2.36 at $89.28 a barrel

in the previous session.

* Brent futures settled up $2.75 at $111.70 a barrel

on Monday after hitting their highest since Oct. 19 at $112.20.

* Moody's Investors Service downgraded France's sovereign

rating by one notch to Aa1 from Aaa, the agency said on Monday,

citing the country's uncertain fiscal outlook as a result of

"deteriorating economic prospects".

A stronger dollar makes greenback-denominated commodities

less appealing to holders of other currencies.

* Euro zone finance ministers will give a tentative go-ahead

for the disbursement of 44 billion euros in emergency loans to

Greece on Tuesday, but the money will only be paid on Dec. 5 if

the country meets all remaining conditions.

* Greece approved laws on Monday to enforce budget targets

and ensure privatisation proceeds are used to pay off debt.

* In the oil-pumping Middle East, Israel bombed dozens more

targets in the Gaza Strip on Monday and said that, while it was

prepared to step up its offensive by sending in troops, it

preferred a diplomatic solution that would end Palestinian

rocket fire.

* Leading U.S. lawmakers expressed confidence on Sunday that

they could reach a deal to avert the "fiscal cliff" even as they

laid down markers on taxes and spending that may make any

agreement more difficult.

* U.S. home resales rose in October and a gauge of

homebuilder sentiment climbed to a six-year high in November,

signs of surprising vigour in the country's still-struggling

housing market.

* U.S. crude oil and gasoline inventories were forecast to

have risen last week while distillate stockpiles were seen

falling, a preliminary Reuters poll of four analysts showed on

Monday.

MARKETS NEWS

* The euro slid lower against the U.S. dollar after France's

downgrade. The euro slipped 0.27 percent to $1.2777

against the greenback on the news. Prior to the rating action

the euro was trading near a two-week high on the U.S. currency.

* U.S. stocks bounced higher for a second consecutive

session on Monday as investors were encouraged by the early

atmosphere surrounding talks to tackle the nation's fiscal

crunch. The Dow Jones industrial average gained 1.65

percent to 12,795.96, while the Standard & Poor's 500 Index

rose 1.99 percent to 1,386.89.

* Japan's benchmark Nikkei average opened up 0.49

percent at 9,198.42 on Tuesday, with the broader Topix

gaining 0.64 percent to 767.05.

DATA/EVENTS

* The following data is expected on Tuesday (GMT):

Bank of Japan announces outcome of policy meeting

Eurogroup meeting, Brussels

0700 Germany Producer prices Oct

1245 U.S. ICSC weekly chain store sales

1330 U.S. Building permits Oct

1330 U.S. Housing starts Oct

1715 U.S. Federal Reserve Chairman Bernanke speaks

2130 U.S. API weekly crude stocks

(Reporting by Meeyoung Cho; Editing by Joseph Radford)

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