UPDATE 7-Brent oil falls on U.S. government shutdown
* U.S. shutdown starts after budget talks fail
* Weak China manufacturing data adds to economic worries
* Iran to meet 6 world powers in mid-October for nuclear talks
(New throughout. Adds new quote. Updates prices.)
NEW YORK, Oct 1 (Reuters) - Brent oil fell to its lowest level in nearly two months on Tuesday, following sharp losses in other commodities, on worries that a shutdown of the U.S. government will crimp demand in the world's largest oil consumer.
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.
Michael Lynch, an oil analyst and president of consultancy Strategic Energy & Economic Research Inc in Winchester, Massachusetts, said that "bullish" headlines that would promote higher prices are thin.
"What's dominating the minds of traders now is the possible negative effects," he said.
Gold, traditionally a safe haven in uncertain times, slid to its lowest since early August. Copper fell by its most in one week. The Thomson Reuters-Jefferies CRB index , a bellwether for commodities, was 0.73 percent lower to its lowest level since Aug. 8.
U.S. stocks were modestly higher. The Dow Jones Industrial Average was last up about a half a percent.
Analysts expect that a swift resolution will limit the downside in oil prices but prices fell swiftly in late morning trade.
Brent crude was trading $1.29 per barrel lower at $107.08 at 11:32 a.m. EDT (1532 GMT), after dropping to a low of$106.81. U.S. crude oil was last trading 92 cents lower at $101.41, after dropping to a low of $101.12.
U.S. gasoline futures traded down to their lowest level since November 2012 at $2.5723 a gallon and were last trading around $2.58.
Oil has come under downward pressure in the past month as supply has improved, with Libya increasing 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.
U.S. manufacturing data was strong and could help put a floor under prices, but it is a backward looking indicator, Lynch said.
"What's happening is still the shut down and you'll have something like one million people without paychecks," he said.
Signs of a thaw in relations between the United States and Iran also weighed on oil prices after U.S. President Barack Obama and new Iranian President Hassan Rouhani spoke by telephone last week.
The world's six major powers will meet Iranian officials in Geneva on Oct. 15-16 to discuss Iran's nuclear program.
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 Peg Mackey in London and Florence Tan in Singapore; editing by William Hardy and Alden Bentley)