UPDATE 2-Brent rises towards $110, set for weekly rise on Egypt unrest
* Investors fret Egypt unrest could spill into producer nations
* US jobless claims fall to 6-yr low, bolster case for Fed tapering
* Iraq undecided on full Basra oil port maintenance in Sept
SINGAPORE, Aug 16 (Reuters) - Brent crude edged up towards $110 a barrel on Friday and was on track for a weekly rise as unrest in Egypt stoked supply fears, but worries the Federal Reserve could soon trim its commodity-friendly stimulus curbed gains
Fears that violence in Egypt could affect the Suez Canal -which carries a large portion of the world's oil - or spread across the Middle East, where supplies already face disruptions, drove Brent to a four-month high in the previous session.
The deeply polarised country braced for renewed confrontation on Friday after the Muslim Brotherhood called for a nationwide march of millions to show anger at a ferocious security crackdown on Islamists in which hundreds were killed.
Brent crude futures for October delivery were up 15 cents at $109.75 a barrel by 0629 GMT, positioned for a weekly rise of over 1 percent.
U.S. crude oil futures for September climbed 19 cents to $107.52.
"The unrest in Egypt is definitely having an impact and putting a floor on prices," said Ben Le Brun, an analyst at OptionsXpress in Sydney.
The strategically important Suez Canal and Egyptian ports were operating normally, shipping sources said on Thursday.
Although Egypt is not an oil producer, investors were wary that unrest could spread around the region, with supply disruptions already affecting Iraq and Libya.
Iraq is still undecided whether to carry out full maintenance on its Basra oil export terminals in September, four oil officials said.
And Libya has restarted refined-product exports from its largest refinery, Ras Lanuf, but most crude oil terminals including Es Sider, the biggest, remain blocked by protests, with exports still running at less than half normal levels.
Strikes at Libya's largest ports have pushed oil production and exports, the lifeblood of the north African country's economy, to their lowest levels since the civil war that ousted veteran leader Muammar Gaddafi in 2011.
"The Libyan government's warning that it will use military force to prevent striking security guards from selling oil independently, suggests the situation could easily escalate further," ANZ analysts wrote in a note on Friday.
SETTING THE STAGE
U.S. equity markets posted their biggest fall since late June on Thursday in the wake of disappointing results from Wal-Mart and Cisco, and on fears positive economic data may set the stage for the Fed to scale back its stimulus soon.
The number of Americans filing new claims for unemployment benefits fell to a near six-year low last week.
"U.S. equity markets put in a very negative performance on Thursday night, so we would have expected oil prices to follow suit," Le Brun said. "So it just goes to show you what an impact the tensions in Egypt are having on oil prices."
(Editing by Joseph Radford and Richard Pullin)