European shares fall, dollar firms as U.S. election looms

European shares fell and the dollar firmed on Monday as low-risk assets gained at the start of a week in which the United States elects a new president and Greece faces a make-or-break parliamentary vote.

The FTSEurofirst index of top European shares opened down 0.4 percent after ending the previous week at a two-week high.

London's FTSE 100 was down 0.4 percent, Paris's CAC-40 was down 0.7 and Frankfurt's DAX was down 0.6 percent.

"You don't want to have too much risk ahead of the U.S. election tomorrow, so I think everyone is going to be very cautious until we see the first indications of who will win," said Tobias Blattner, an economist at Daiwa Securities.

With the political uncertainty in the world's largest economy making investors wary of holdings riskier assets, safe-haven bids pushed the U.S. dollar to two-month highs against a basket of major currencies .

The euro extended recent losses, falling to a new two-month low against the dollar of $1.27925 ahead of a vote in Greece on Wednesday on a package of cost cuts and tax hikes that international donors want passed before they offer more crucial aid.

German government bond futures rose to a two-month high, 22 ticks higher at 142.09, breaking the 142 technical barrier which has survived several tests over the past six weeks.

In Asian trading, the MSCI index of Asia-Pacific shares outside Japan <.MIAPJ0000PUS> inched down 0.2 percent, while Japan's Nikkei average <.N225> fell 0.5 percent.

U.S. stock futures suggested a firm Wall Street start, with a 0.2 percent rise. Gold ticked up 0.2 percent to $1,679.20 after Friday's 2 percent plunge to a two-month low of $1,673.94 an ounce.

(Reporting by Marc Jones; editing by Philippa Fletcher)