UPDATE 11-Oil falls as global economic data dims demand outlook

Reuters Middle East

* China, Europe services PMI disappoint

* U.S. RBOB gasoline futures continue sell off

* U.S. crude stocks dip unexpectedly - EIA

* Coming up: U.S. jobless claims data 8:30 a.m. EDT Friday

(Updates Brent day's low, adds detail paragraphs 5,9,17-19)

By Robert Gibbons

NEW YORK, Oct 3 (Reuters) - Oil prices fell sharply on

Wednesday as disappointing economic data from China and Europe

reinforced concerns about slowing growth and a weakening demand

for petroleum, even as supportive U.S. data strengthened the

dollar.

U.S. November RBOB gasoline futures retreated a

second straight session, falling 2.5 percent, helping pressure

U.S. crude to a two-month low.

Concerns about China and Europe allowed investors to shrug

off any supportive sentiment that might have accrued from the

U.S. Energy Information Administration's (EIA) inventory report.

The EIA said U.S. crude stocks fell 482,000 barrels last week,

against forecasts stockpiles would be up 1.5 million.

"The global economy is in a rut, and even with supportive

EIA data crude is down," said Dan Flynn, an analyst at Price

Futures Group in Chicago.

Brent November crude fell $3.40 to settle at $108.17

a barrel. Wednesday's $107.67 low was the lowest price since

Sept. 20.

Brent's drop on Wednesday put it in sight of the 100-day

moving average of $106.28, after Tuesday's settlement below two

technical levels also closely watched by traders charting price

movements - the 50-day moving average at $112.06 and the 200-day

moving average at $112.09.

U.S. November crude slumped $3.75 to settle at $88.14 a

barrel, below its 100-day moving average of $89.99. It dropped

to $87.70 in post-settlement trading, its lowest since prices

fell to $87.23 on Aug. 3.

The 4.08 percent slide was the biggest one-day percentage

drop since June 21.

Total crude trading volumes were healthy, with Brent

turnover 17 percent above its 30-day average and U.S. dealings

surpassing its 30-day average by 22 percent.

In addition to the slump in U.S. gasoline, which

settled 6.97 cents lower, heating oil joined in the

retreat, falling 5.91 cents.

Gasoline's settlement left front-month futures down 54.25

cents from where October futures settled and went off the board

last Friday.

U.S. gasoline stocks rose slightly, by 114,000 barrels, last

week, the EIA's report said, while distillate inventories fell

3.69 million barrels, much more than expected.

Gasoline stocks were expected to be down 600,000 barrels,

while total distillate supplies were estimated to be down only

400,000 barrels, a Reuters survey of analysts showed.

Ahead of Friday's closely watched September nonfarm payrolls

report, separate reports showed U.S. private employers added

more jobs than expected in September and activity in the vast

services sector picked up.

The reports increased hopes that the U.S. economy might be

on a more stable economic path and helped the dollar rise across

the board, but a stronger U.S. currency can pressure

dollar-denominated commodities like oil.

While oil prices showed little reaction, traders and

analysts were monitoring Middle East turmoil, including Turkey's

military hitting targets inside Syria in response to a mortar

bomb fired from Syrian territory.

U.S. Secretary of State Hillary Clinton held out the

possibility on Wednesday that sanctions on Iran could be eased

quickly if Tehran worked with major powers to address questions

about its nuclear program.

In Tehran, Iranian police clashed with demonstrators and

arrested money changers in Tehran in disturbances over the

collapse of the Iranian currency, which has lost 40 percent of

its value against the U.S. dollar in a week.

DISAPPOINTING EUROPE, CHINA DATA

Dwindling new orders and more layoffs marked a worsening

decline for euro zone companies last month, according to

business surveys released on Wednesday.

China's normally robust services sector weakened sharply in

September to its lowest point since November 2010 as slow growth

in manufacturing began to feed through to the rest of the

economy, an official survey showed.

Highlighting the faltering economy's effect on oil

consumption, retail sales in the euro zone barely rose in August

as motorists cut back spending on fuel during the normally busy

driving months in the summer.

"There's little to be cheerful about. There's worry about

whether Spain will ask for a bailout or not and there's major

uncertainty around China," said Filip Petersson, an analyst at

SEB in Stockholm. "It's difficult to be bullish at the moment."

(Additonal reporting by Simon Falush and Peg Mackey in London

and Ramya Venugopal and Wang Tao in Singapore; Editing by

Marguerita Choy and Bob Burgdorfer)