UPDATE 1-Brent slips below $109 on demand growth worries
* Modest rise in U.S. retail sales offers cautionary note
* U.S. crude, gasoline stocks, refinery runs dropping - poll
* Coming Up: U.S. API weekly crude stocks; 2030 GMT
(Adds comments, updates prices)
SINGAPORE, July 16 (Reuters) - Brent futures slipped below $109 a barrel on Tuesday because of worries over demand from the world's second-biggest oil consumer China, but forecasts of a third straight drop in weekly U.S. crude inventories kept the losses in check.
Confirmation later in the day of the expected fall in stockpiles in the world's biggest oil consumer may push the U.S. benchmark to a new high for the year, narrowing its difference to Brent further.
The European contract remained under pressure because of China's weak growth outlook and uncertainty surrounding Europe amid ample global supplies.
Brent crude slipped 29 cents to $108.80 a barrel by 0609 GMT, after rising earlier to as much as $109.22 - just off a three-month high hit on Monday. U.S. oil fell 21 cents to $106.10. It touched this year's high of $107.45 on July 11.
"We expect Brent to underperform the U.S. benchmark because the latest Chinese numbers were weak and there are further downside risks to China," said Natalie Rampono, an analyst with ANZ in Melbourne.
"The U.S. contract will do better as pipeline bottlenecks get alleviated, improving crude flows and due to seasonal tightness."
The Asian Development Bank (ADB) on Tuesday lowered its growth forecasts for developing Asia this year and the next as a softer outlook for China meant subdued economic activity elsewhere in the region. A day earlier, China said its second-quarter growth slowed.
U.S. commercial crude stocks likely fell 2 million barrels on average for the week ended July 12, a Reuters poll of eight analysts showed.
U.S. crude inventories plunged 20 million barrels over the previous two weeks, the deepest two-week draw on record, Energy Information Administration data showed on July 10.
"If the (inventory) forecast is confirmed, we may see U.S. futures rise above $108 a barrel and touch a new high for the year," said Ryoma Furumi, a commodity sales manager at Newedge in Tokyo. "But without any other fundamental factors, broader macroeconomic data and numbers will influence oil for today."
Data continues to be mixed, however, with U.S. retail sales rising less than expected in June, while a separate report showed factory activity in New York state accelerating in July.
Investors are for now sticking with the view that the Federal Reserve will start reducing its bond buying this year and scrap it by mid-2014, with no surprises expected from Chairman Ben Bernanke's testimony on Wednesday.
The dollar eased versus a basket of currencies on Tuesday but its losses were limited, helping to cap any further upward moves in oil. A strong greenback makes it more expensive for holders of other currencies to buy dollar-denominated commodities and usually pressures prices lower.
Lingering supply disruption worries are also helping put a floor on oil. Investors are watching the unfolding regime change in Egypt, where police fired tear gas on Monday at Cairo protesters calling for the reinstatement of the ousted Islamist president, Mohamed Mursi.
"Geopolitical tensions have been put aside somewhat, but they are always running in the back of the mind of people," Furumi said. "It won't take long for these worries to come to the forefront."
(Editing by Tom Hogue and Michael Perry)