UPDATE 6-Oil pulls back as economic concerns trump jobs gains
* November U.S. jobs growth beats expectations
* Consumer confidence weakens in early December
* China data expected to show growth recovery, support oil
(Recasts with updated prices, market activity; changes dateline, pvs LONDON) NEW YORK, Dec 7 (Reuters) - Oil prices pulled back in choppy trading on Friday as Europe's economic problems and uncertainty about budget wrangling in the United States put pressure on crude futures after a brief rally on a U.S. jobs report. Brent and U.S. crude futures remained on target to post weekly losses of more than 3 percent after a rally sparked by the bullish jobs data wilted. U.S. nonfarm payrolls rose 146,000 in November, the Labor Department said, against expectations of job growth would be slowed by the effect of Hurricane Sandy. But oil's rally stalled after a separate report showed U.S. consumer confidence plummeted in early December to its lowest level since August. The Thomson Reuters/University of Michigan's preliminary confidence reading fell to 74.5 from 82.7 a month earlier. "Oil got a boost from the jobs numbers, but the consumer confidence pulled us back some and now traders will have to decide if they want to be short going into the weekend with the situation in the Middle East still so volatile," said Phil Flynn, analyst at Price Futures Group in Chicago. Brent January crude dipped 7 cents to $107.03 a barrel by 12:19 p.m. EST (1719 GMT), having swung from $106.66 to $107.89. U.S. January crude was down only 8 cents at $86.18 a barrel, having traded from $85.80 to $86.92. While U.S. heating oil futures continued to slide, gasoline futures managed to hold on to a slight gain in midday trading in New York. Lending support to oil futures early on Friday were expectations that data to be released on Sunday would show annual growth in China's factory output, investment and retail sales may have gained pace in November thanks to recent pro-growth policies. More gloomy forecasts from the euro zone and uncertainty about budget talks in the United States kept fears about slowing economic growth and curbed oil demand in focus after oil prices felt pressure earlier this week from a bearish U.S. oil inventory snapshot. The central banks of Germany and Austria on Friday forecast barely any economic growth in 2013, with the German Bundesbank citing the risks of a recession, a day after the European Central Bank cut its own forecasts for the euro zone region.
The dollar also rallied initially on the better-than-expected jobs data on speculation the fast pace of hiring might cause the U.S. Federal Reserve to opt for a smaller stimulus program at next week's policy meeting. The dollar index was up on Friday and a stronger U.S. currency often applies pressure on dollar-denominated commodities like oil. Economic worries about both sides of the Atlantic have curbed investor appetite for riskier assets, putting the Thomson Reuters-Jefferies CRB index, a bellwether for commodities, in negative territory so far this quarter. With about three weeks left before the so-called "fiscal cliff" deadline, the task of averting the steep tax hikes and spending cuts hinged on talks between Republican House Speaker John A. Boehner and President Barack Obama, according to Capitol Hill aides. U.S. Federal Reserve policymakers are scheduled to meet on Dec. 11-12 to review monetary policy and oil market participants also will react to OPEC's meeting on Wednesday, though the exporter group is not expected to alter output policy. Developments in the Middle East continued to require oil investors' attention, as a heightened political crisis in Egypt and inflamed conflict in Syria have reinforced fears of potential disruptions to oil supply from the region.
(Reporting by Robert Gibbons; additional reporting by Alex Lawler in London and Ramya Venugopal in Singapore; editing by Sofina Mirza-Reid)