* Stock markets, euro up on hopes of better U.S. jobs data
* Spain expected to ask for euro zone financial bailout
* Unrest in Iran, Turkey-Syria raise geopolitical worries
* Coming up: ECB policy meeting at 1400 GMT
(Updates throughout, changes dateline, previous SINGAPORE)
By Alice Baghdjian
LONDON, Oct 4 (Reuters) - Brent crude oil rose towards $109 per barrel on Thursday as expectations Spain would seek a bailout and better U.S. data encouraged investors back into riskier assets such as oil and commodities.
Stock markets and the euro rallied on Thursday ahead of a European Central Bank policy meeting which is likely to keep rates unchanged and U.S. jobs figures that were expected to show the world's biggest economy recovering slowly.
The euro rose to a two-week high against the yen, gold gained for a fourth day and copper rallied in what traders described as a general return to risk appetite.
Brent crude for November was up 70 cents per barrel at $108.87 by 0830 GMT. The contract fell to an intra-day floor of $107.67 on Wednesday, the lowest since Sept. 20.
U.S. light crude oil for November rose 50 cents to $88.64 a barrel, after dropping to its lowest since Aug. 3 in the previous session.
On Wednesday, Brent dropped 3 percent and U.S. crude lost 4 percent as fears a delayed recovery in China and recession in the euro zone would limit energy demand.
"There was no really convincing explanation for the fall in price yesterday," said Carsten Fritsch, analyst at Commerzbank. "We are seeing a counter-movement, a slight counter-movement, after the exaggerated decline in price."
Even as economic worries in Europe and China keep investors jittery, data from the U.S. is offering hope, with private employers adding more jobs than expected in September and new orders helping a pick-up in the service sector.
This data preceded widely followed jobs numbers from the U.S. Labor Department on Friday, which are expected to show a slight improvement from the previous month.
Employers are expected to have added 113,000 jobs to their payrolls, an increase from 96,000 in August, with the unemployment rate edging up by a tenth of a percentage point to 8.2 percent, according to a Reuters survey.
Also supporting crude, U.S. inventory levels unexpectedly dropped last week despite an increase in imports. Crude stocks fell by 482,000 barrels, compared with expectations for a 1.5 million-barrel increase.
In Europe, policymakers at the ECB may hold interest rates steady at Thursday's meeting to allow time for new details on the health of the euro zone economy and for Spain to ask for aid.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Graphic - Euro zone growth: Graphic - ECB: Graphic - oil in euros: Graphic - Assets in 2012: ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> IRAN
Economic worries remained at the forefront of all asset markets this week as a series of surveys across the world pointed to increasing weakness, casting doubts over the still-fragile recovery.
Wednesday's data showed that the service sector in the euro zone had declined even further, diminishing chances that the region will see growth before next year.
Even China's normally robust services sector weakened to a two-year low in September, as the impact of the slowdown in the export-focused nation's biggest customers hit home.
Besides growth concerns, investors are also fretting about the deepening euro zone crisis. Greece is struggling to strike a deal with its lenders on disputed austerity cuts, while Spain is expected to be the next nation to request a bailout.
Geo-political concerns include a dispute in the Middle East over a nuclear programme in Iran that triggered tough sanctions from the United States and the European Union and plunged the Iranian rial to a record low this week.
Adding to the tensions is social unrest in Iran over the weakening currency, the proverbial last straw for its citizens who are already reeling under the impact of the sanctions.
Elsewhere, Turkey's military hit targets inside Syria after mortar bomb fired from Syrian territory killed five Turkish civilians, marking the most serious cross-border escalation of the 18-month uprising in Syria.
(Writing by Christopher Johnson; additional reporting by Ramya Venugopal in Singapore; editing by James Jukwey)
Keywords: MARKETS OIL/