UPDATE 4-Brent edges to $108 as U.S. government begins shutdown
* U.S. shutdown starts after budget talks fail
* Weak China manufacturing data adds to economic worries
* Iran to meet P5+1 in mid-October for nuclear talks
(Adds quote, updates prices)
LONDON, Oct 1 (Reuters) - Brent oil eased to around $108 a barrel on Tuesday on worries that a shutdown of the U.S. government will crimp demand, while easing tensions in U.S.-Iran nuclear talks boosted prospects for an increase in supply.
The U.S. government began a partial shutdown on Tuesday for the first time in 17 years, potentially putting up to 1 million workers on unpaid leave, closing national parks and stalling medical research projects.
But analysts expect that a swift resolution will limit the downside in oil prices.
"For the moment the 30-second news snippets hitting the media airwaves on the U.S. government will continue to dominate the short-term market moves, with most of the normal price drivers playing a secondary role," Dominick Chirichella, of the Energy Management Institute, said.
"Needless to say, the U.S. is entering what I would categorize as a very messy period and one that will be laden with market risk as the dysfunction in Washington, D.C. continues."
Brent crude fell 17 cents to $108.20 a barrel by 1113 GMT, after earlier slipping under $108. U.S. crude was at $102.32, down 1 cent.
Oil has come under downward pressure in the past month as supply has improved, with Libya ramping up output and tensions easing over Syria.
In China, weaker-than-expected growth in the manufacturing sector in September added to concerns that a nascent recovery in the world's second-largest economy might be foundering.
Signs of a thaw in relations between the United States and Iran also weighed on oil prices.
U.S. President Barack Obama and new Iranian President Hassan Rouhani spoke by telephone last week in the highest level contact between the countries in more than three decades, fuelling hopes for a resolution of Iran's decade-old nuclear standoff with the West.
The world's six major powers will meet Iranian officials in Geneva on Oct. 15-16 to discuss Iran's nuclear programme.
Investors are also looking ahead to data on U.S. oil inventories on Wednesday. The U.S. Energy Information Administration said it has enough resources to operate to around Oct. 11 in the event of a government shutdown.
U.S. commercial crude oil inventories were forecast to have risen last week and gasoline stockpiles to have fallen, a preliminary Reuters poll of five analysts showed.
(Additional reporting by Florence Tan in Singapore; Editing Jane Baird)