* U.S. presidential election in focus
* RBA expected to cut rates by 50 bps to 5.5 pct
* Japan exporters' selling seen keeping dollar below 100 yen
By Rika Otsuka
TOKYO, Nov 4 (Reuters) - The dollar was little changed against a basket of major currencies in quiet trade on Tuesday as investors sat on their hands ahead of the U.S. presidential election starting later in the day.
The euro slipped against the dollar and the yen as the European Central Bank is seen cutting interest rates by half a percentage point to 3.25 percent from the current 3.75 percent on Thursday in an attempt to help the flailing economy.
Central banks around the world have lowered rates to fight the worst financial crisis in 80 years.
"Investors have little choice but to shift their money to the dollar as data has almost confirmed that key European economies are heading into a recession," said a forex trader at a Japanese brokerage.
"Deep troubles in countries surrounding the euro zone are also making the euro vulnerable against the dollar," he said.
The dollar index, which measures the U.S. currency's value against a basket of six currencies, dipped 0.1 percent to 86.36 It hit a 2-½ year peak of 87.88 last week.
The euro fell 0.2 percent from late U.S. trade to $1.2617. The European single currency slid 0.7 percent against the dollar the previous day as lingering concerns about financial markets and the world economy prompted investors to reduce risk and seek safety in dollar-denominated assets.
The dollar slipped 0.2 percent to 98.92 yen after rising as high as 99.36 yen in early Asian trade on trading platform EBS.
The U.S. currency is expected to stay below the psychologically important 100 yen level as Japanese exporters are expected to sell dollars to repatriate their profits. Many exporters are assuming a rate of 100 yen in their business plans for the fiscal year ending in March.
The Bank of Japan lowered interest rates to 0.3 percent from 0.5 percent on Friday in its first rate cut in seven years.
The impact on the yen has been small as the cut was unlikely to change Japan's economic fundamentals, traders said. Japanese financial markets were closed on Monday, a national holiday.
The Federal Reserve cut interest rates by 50 basis points to 1.0 percent last week.
The euro fell 0.5 percent against the yen to 124.68 yen.
The Reserve Bank of Australia is expected to lower interest rates at its policy meeting on Tuesday, cutting the cash rate by 50 basis points to 5.5 percent.
The central bank surprised investors last month by slashing interest rates by a full percentage point in an attempt to cushion the economy from the financial turmoil.
The Australian dollar was down 0.8 percent at $0.6705.
Market activity is likely to remain subdued until the result of the U.S. presidential election on Tuesday is announced.
Democrat Barack Obama has led the presidential race in every national opinion poll since late September, but Republican John McCain is still hoping to pull off a historic upset.
"The deterioration of the U.S. economy will be a bit slower if Obama wins, as a change in the ruling party is likely to help Americans become more hopeful for the future," said Daisuke Uno, chief strategist at Sumitomo Mitsui Banking Corp.
Even so, a victory by Obama is unlikely to change the dollar's long-term slide against the yen, Uno said. The U.S. currency may fall to a 13-year low of 90.87 yen before the year ends, he said.
Data on Monday showed U.S. factory activity contracted sharply in October, falling to its lowest in 26 years as the financial crisis ravaged the world's largest economy and its trading partners around the globe.
(Editing by Sophie Hardach)