* Tightening U.S. presidential race overshadows economics
* U.S. Federal Reserve still on for December rate rise
* Friday payrolls data awaited as election looms
* Eyes on Brexit court decision, Bank of England (Adds fresh quote, updates prices)
By Yumna Mohamed
LONDON, Nov 3 (Reuters) - Politics dominated currency markets on Thursday as U.S. election worries kept the dollar weak against the yen JPY= while sterling rose more than one percent after a UK court ruled parliament would have to approve the start of Brexit talks.
The dollar recovered some ground to trade at less than $1.11 per euro EUR=D4 , helped by a Federal Reserve meeting on Wednesday that again pointed towards a rise in interest rates next month, also likely to be backed by payrolls data on Friday.
But investors were still preoccupied by U.S. elections and the prospect of a victory for Donald Trump that they fear would carry global risks to trade and growth.
Investors were unsettled by media reports that some agents at the FBI had wanted to press ahead with an investigation of the Clinton Foundation, the latest twist in a long-running inquiry into candidate Hillary Clinton's use of a private email server while she was secretary of state.
"There have been reports and rumours doing the rounds and we have to be respectful of those stories but I'm not expecting people to trade other than very speculatively on those reports," Jeremy Stretch of CIBC World Markets said.
Meanwhile, a robust U.S. nonfarm payrolls report on Friday is seen as a crucial ingredient to any Fed move. Employers are expected to have added 175,000 jobs in October, according to the median estimate of 106 economists polled by Reuters. ECONUS
But while traders are pricing in a 78 percent likelihood that the Fed will raise interest rates in December, the running assumption is that a Trump win has the potential to delay that move.
"While a December rate rise still seems the most likely outcome and the probability of a move in December has gone up to 78 percent overnight, we can't rule out the prospect of a delay if the U.S. economy undergoes a Trumpectomy in just under a weeks' time," CMC Markets strategist Michael Hewson said in a note.
The dollar was last down 0.1 percent to 103.17 yen JPY= at 1135 GMT, with markets in Japan closed for a public holiday.
An average of polls compiled by RealClearPolitics website showed Clinton just 1.7 percentage points ahead of Trump nationally on Wednesday, with 47 percent support to his 45.3 percent.
But a Reuters/Ipsos daily tracking poll released on the same day showed Clinton ahead by 6 percentage points among likely voters. dollar index .DXY, which tracks the greenback against a basket of six major currencies, was flat at 97.351 after dropping as low as 97.079 earlier, its lowest since Oct. 11.
The Australian dollar was up 0.1 percent at $0.7670 AUD=D4 against its U.S. counterpart.
The Mexican peso, considered a proxy for Trump's campaign due to that candidate's vows to curb immigration and reconsider trade relations, was down 0.4 percent MXN= to 19.2700 pesos.