UPDATE 3-Oil eases towards $111 on Iran diplomacy, U.S. budget crisis
* Chinese exports fell unexpectedly in September
* China's crude imports hit record high
* U.S. consumer confidence falls
(Updates prices, adds quotes, changes dateline, previous SINGAPORE)
LONDON, Oct 14 (Reuters) - Global oil futures edged lower towards $111 per barrel on Monday as investors awaited the start of Iranian nuclear talks, while a looming deadline to head off U.S. default added to worries about the outlook for oil demand.
Weekend talks to avert a U.S. debt default showed signs of progress on Sunday, but there were still no guarantees that a government shutdown was about to end.
Underscoring the urgency of resolving the impasse, both the Senate and House of Representatives are scheduled to be in session on Monday, even though it is the Columbus Day holiday.
"Markets are hamstrung by what's going on in the U.S. If they go over the deadline that will make people really nervous," said Michael Hewson, analyst at CMC Markets in London.
"Iran will have an effect in driving prices lower. Any easing of tensions and the fact that they are talking will have some downward effect."
Talks about Iran's nuclear programme, which start in Geneva on Tuesday, will be the first since the election of Iranian President Hassan Rouhani, who as tried to improve ties with the West to pave the way for an end to sanctions.
Brent futures fell 20 cents to $111.08 per barrel at 0838 GMT. U.S. oil was up 45 cents at $102.47 a barrel.
The spread between Brent and WTI has widened in the last two weeks as the U.S. budget crisis has weighed more heavily on its domestic contract than it has on Brent.
"Brent has held steady so far. The market doesn't expect a sudden loosening of sanctions on Iran otherwise we wouldn't be this steady," said Christopher Bellew, oil trader at Jefferies Bache. "I expect that when it stops holding steady Brent will start to fall."
Failing to raise the debt ceiling would leave the world's biggest economy unable to pay its bills in coming weeks.
An unexpected decline in Chinese exports in September also weighed on oil prices. Exports fell an annual 0.3 percent in September versus market forecasts of a rise of 6 percent, reflecting weak global demand and defying a recent slew of data that pointed to a stabilising Chinese economy.
Nevertheless, data released over the weekend showed China's imports of crude oil rebounded in September to a record high. Average imports of crude in September stood at 6.25 million barrels per day, up 28 percent on the year and topping the previous record of 6.15 million bpd set in July.
"While the rebound was in part due to restocking and pre-holiday front-loading, underlying demand will likely remain healthy in the fourth quarter on year-end manufacturing activity," Sijin Cheng, commodity analyst at Barclays in Singapore, said in a note.
Chinese GDP data will be released on Friday.
(Additional reporting By Jacob Gronholt-Pedersen; editing by Keiron Henderson)