* 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
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
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
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)