UPDATE 6- Oil drops to two-week low as Syria strike threat ebbs
* China factory output growth tops forecast, retail sales up
* Russia's Syria proposal eases supply concerns
* OPEC sees enough oil now, market share fall looms
(Updates prices; changes byline and dateline, previous LONDON)
NEW YORK, Sept 10 (Reuters) - World oil prices tumbled by more than $2 on Tuesday as the threat of an immediate military strike on Syria receded following Syria's acceptance of a Russian proposal to give up its chemical weapons.
Brent posted its largest two-day fall since June after Russia said on Tuesday it was working with Syria on an "effective, clear, concrete" plan to put Syria's chemical weapons under international control.
News that a Libyan committee was poised to offer proposals to end an ongoing labor dispute involving the country's oil and gas workers also eased supply concerns.
United States Secretary of State John Kerry told a hearing of the House of Representatives Armed Services Committee that the U.S. would not be "waiting for long" for Russia's plan, and would not accept a delaying tactic.
"Whether there's been a deal reached remains to be seen, but this proposal being floated has basically wiped out about $5 of our political risk premium and the market continues to let the air out of the balloon," said Gene McGillian, an analyst at Tradition Energy in Stamford, Connecticut.
Brent for October delivery fell $2.80 to $110.92 per barrel by 11:23 a.m. EDT (1523 GMT) after sliding more than $3 to a session low of $110.59, its weakest level since Aug. 26.
U.S. crude fell $2.96 to $106.56 after also losing more than $3 to hit a session low of $106.39.
Benchmark Brent crude prices fell early in the session after U.S. President Barack Obama said on Monday he saw a possible breakthrough in the crisis with Syria after Russia seized on an apparently throwaway public remark by Secretary Kerry about Syria turning over its chemical weapons.
Oil prices pared losses when upbeat Chinese industrial output data raised expectations of a rebound in demand from the world's No. 2 oil consumer, but resumed their decline to reach two-week lows after Syria accepted Moscow's plan.
Brent had climbed to six-month peaks above $117 and West Texas Intermediate (WTI) hit a 28-month high of $112.24 late last month on worries that a possible U.S.-led military strike against Syria might disrupt oil supplies from the Middle East, but those highs swiftly unwound over the past two days.
The head of the Libyan government energy committee said on Monday that a group tasked with resolving Libya's oil paralysis will brief General National Congress by Wednesday with proposals on how to end the confrontation, suggesting some possibility that Libyan exports could resume.
"It looked like the decrease in Libyan exports had been a reason why we were up, and now it looks like there's potential for some solution," said Michael Korn, president of Skokie Energy in Princeton, New Jersey.
Last week, Libya's oil output hit a post-war low of just 150,000 barrels per day compared to its capacity of 1.6 million bpd. Exports have fallen to 80,000 bpd.
OPEC said the world oil market was well supplied despite a plunge in Libya's output and forecast a further drop in its oil market share in 2014 due to rising supply from the United States and other countries outside the exporters group.
Britain, France and the United States will table a resolution on Syrian chemical weapons in the United Nations Security Council later on Tuesday, British Prime Minister David Cameron said, reacting to the Russian proposal on Syria.
The U.S. industry group the American Petroleum Institute will release its weekly stockpile report at 4:30 p.m. EDT (2030 GMT). U.S. commercial crude oil and gasoline inventories were seen falling last week, while distillate stocks were forecast to have risen, an initial Reuters poll of analysts showed on Monday.
(Additional reporting by Lin Noueihed in London and Manolo Serapio Jr. in Singapore; Editing by Chris Reese)