NEW YORK (MarketWatch) -- Crude oil gained back some ground on Monday after a sell-off in the previous session, as upbeat economic reports in China and Europe fueled hopes for a recovery in oil demand. Traders also awaited U.S. economic data, starting with the Institute for Supply Management's manufacturing index for October, which is expected to rise to 53.0%. Crude oil for December delivery rose 40 cents, or 0.5%, to $77.40 a barrel in electronic trading on Globex. Economic reports this week will take on added significance ahead of the Federal Reserve's monetary policy announcement on Wednesday. Confirmation last week that the U.S. economy returned to growth in the third quarter failed to prevent a sell-off in stocks on Friday amid concerns over consumer spending. U.S. stock futures pointed to a higher opening on Wall Street. See Indications. Data on pending home sales and construction spending for September also will be released Monday. "Oil prices are slightly higher on the session after positive PMI figures from China, the world's second biggest oil user," wrote analysts at Action Economics. China's manufacturing sector in October expanded at its fastest pace in 18 months, according to HSBC's China Purchasing Manager's Index, echoing a bullish picture painted by earlier official data. The PMI came in at 55.4, up from 55.0 in September, HSBC said Monday. Read full story. The headline PMI figure was the seventh straight month that the index has held above 50, the threshold marking whether the factory sector is expanding or shrinking. A European manufacturing report also lifted sentiment about global growth. The final Markit October manufacturing PMI for the 16-nation euro zone came in at 50.7, breaching the neutral 50-level for the first time in 17 months and confirming a preliminary estimate. Good economic news usually boosts crude prices, because it raises hopes of a quick economic recovery and a rebound in energy demand. The data also pressured the dollar, which has tended to be used as a safe-haven currency over the past year, losing its appeal on upbeat news. The dollar index (DXY 76.29, -0.08, -0.11%) , which measures the greenback against a trade-weighted basket of rival currencies, traded at 76.298 in recent action, down from 76.320 in North American trade late Friday. The dollar had strengthened over the past week amid doubts that the U.S. economic outlook fully justified the strength of the rally in stocks since March. Crude futures slumped 3.6% on Friday, even as oil prices held to a 9% surge for October. But "the currency correction seen last week now appears to be coming to an end providing a renewed buying opportunity for many currencies ahead of the [Fed] meeting," said analysts at BNP Paribas in a note. Also on Globex, December reformulated gasoline gained 1 cent to $1.97 a gallon and December heating oil rose 1 cent, or 0.6%, to $2.02 a gallon.

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