RTRS: Crude oil off 2-year highs as dollar strengthens
* Crude oil prices touch two-year highs early in session
* Stronger dollar pressures crude oil, gold prices
* Coming Up: U.S. Employment index Oct; 1400 GMT
(Updates prices)
By Zaida Espana
LONDON, Nov 8 (Reuters) - Oil prices touched two-year highs of $87.49 a barrel on Monday, before easing towards $86 a barrel as a stronger dollar prompted profit-taking.
By 1128 GMT, U.S. crude for December delivery shed 38 cents to $86.47 a barrel. ICE Brent was 44 cents lower at $87.67 a barrel.
The stronger greenback -- which typically trades in negative correlation with dollar-denominated commodities -- also weighed on gold prices, pulling them lower from a fresh record of $1,398 an ounce earlier.
"It is a reasonable reaction given the U.S. dollar continues to strengthen and it was very unlikely that (oil) could continue to decouple from the U.S. dollar," Commerzbank oil analyst Carsten Fritsch said.
"If the dollar continues to regain strength, this should weigh on oil prices and could lead to some profit-taking," Fritsch said.
The dollar index, a measure of the greenback's performance against a basket of currencies, rose 0.82 percent to 77.04.
In Europe, the euro fell to lows against the dollar on concerns about so-called peripheral euro zone economies, and after an expected fall in September German industrial output.
OIL FUNDAMENTALS- WHERE IS THE SUPPORT?
Commodities rallied last week after the U.S. Federal Reserve unveiled a second round of monetary stimulus, while oil climbed after a stronger-than-expected jobs report on Friday spurred expectations of an improving economic outlook for the world's top oil consumer.
"There are signs of improving economic activity, particularly from the U.S. with a much better than expected labor market report, which signals that the U.S. economy could see some moderate re-acceleration in the weeks or months ahead," Stefan Graber at Credit Suisse in Singapore.
Over the weekend, a senior International Monetary Fund official said a rise in oil prices would not threaten the global economic recovery.
"Oil, as long as it stays above this area, could be considered a continued mover on to $90 and plus," said Jonathan Barratt, managing director at Commodity Broking Services in Melbourne, but added that he does not see fundamentals supporting such a price.
