UPDATE 4-Oil falls to $75 as dollar rises, risk hunger down

                                
 * Volatility index shows market desire for risk falling
                                
 * Dollar stronger on Friday's unexpected U.S. jobs data
                                
 * Oil pressured by equities drop, dollar rise
                                
 
                                
 (Updates prices, adds comment)
                                
 By Chris Baldwin
                                
 LONDON, Dec 7 (Reuters) - Oil prices dropped to $75 a barrel
on Monday reacting to a rising dollar and tracking weak European
equities as investors became more risk averse.
                                
 NYMEX crude for January delivery <CLc1> fell 46 cents to
$75.01 a barrel by 1041 GMT. The contract fell 99 cents to
settle at $75.47 a barrel on Friday.
                                
 Brent crude <LCOc1> was down 33 cents at $77.19 a barrel,
more than $2 above front month NYMEX.
                                
 "What we're seeing on Monday morning is a bit of dollar
strength following on from Friday and a reaction in financial
markets by oil," said broker Tony Machacek at Bache Financial.
                                
 The dollar hit a five-week high against a currency basket on
Monday, extending its rally from Friday when strong U.S. jobs
data fuelled speculation the Federal Reserve may consider
winding down its stimulus measures. [USD/]
                                
 European shares fell off Friday's two-week closing high in a
broad market sell-off as investor appetite for risky assets
began to fall, with the VDAX-NEW volatility index <.V1XI> rising
5 percent, signifying a lower market desire to take on risk.[.EU]
                                
 The dollar has taken a beating for much of the year on the
view that interest rates in the United States will stay low as
those in other banking zones rise. This would increase the yield
advantage of other currencies against the dollar.
                                
 "Oil was a bit odd on Friday, a little bit schizophrenic and
couldn't decide whether the non-farms data was a good thing or a
bad thing before it finally decided it was good," said David
Morrison, an analyst at privately-held fund GFT in London.
                                
 "Today it's right back to the familiar old relationship as
we see the dollar rising."
                                
 Dollar strength makes commodities priced in the unit more
expensive for holders of other currencies.
                                
 
                                
 CONTANGO RISING
                                
 The spread between first and second month U.S. crude, also
known as West Texas Intermediate, or WTI, was nearly $1.90
higher, a market condition known as contango.
                                
 The forward contango for WTI is steepening with the 24th
month contract <CLc24> last traded at $90.05 versus 89.74 on
December 1, while the front month has fallen 4.3 percent from
$79.04 this month.
                                
 For graphic showing steepening of the forward curve, click:
 http://graphics.thomsonreuters.com/129/CMD_NYOIL1209.gif  
                                
 Looking ahead to the end of the week, a raft of Chinese data
including import numbers will offer more guidance with
expectations for crude imports to remain high. [ECONCN]
                                
 "As far as this week goes, a resurgent dollar will spell
further weakness for crude, doubly so if gold gives up its
spectacular gains," analyst Stephen Schork wrote in the Schork
Report newsletter.
 (Additional reporting by Nick Trevelyan in Singapore, editing
by Keiron Henderson)