UPDATE 1-Brent rises, above $109, as Chinese GDP offsets US oil stocks gain
* China's Q3 GDP growth fastest this year, but outlook murky
* China's Sep implied oil demand down 1.8 pct on yr to 9.61 mln bpd
* Brent may retest support at $108.68 -technicals
(Adds comments, weekly milestone, updates prices)
SINGAPORE, Oct 18 (Reuters) - Brent futures rose on Friday, holding above $109 a barrel as data showing China's economy grew in the third quarter at the fastest pace this year helped offset concerns about demand for oil after a rise in crude stockpiles in the United States.
The Chinese data underpinned the better tone in financial markets, a day after the United States sealed an 11th-hour deal to end a government shutdown.
Asian shares hit a five-month high, although gains in oil may be limited by the worries about demand plus the prospect of further U.S. fiscal talks in just a few months' time.
Brent crude had gained 23 cents to $109.34 a barrel by 0541 GMT. However, the contract is poised to lose 1.7 percent on the week, snapping two weeks of gains.
U.S. oil gained 30 cents to $100.97 but is set to decline for a second week.
"The Chinese government will meet their target growth rate of 7.5 percent and that will support oil, going forward," said Tetsu Emori, a commodity fund manager at Astmax Investments in Tokyo.
"Overall sentiment is weak because of the U.S. debt issue. Without a permanent solution, it becomes difficult to decide whether to take on more risk or not."
Both the contracts settled more than a dollar lower overnight as data from the American Petroleum Institute (API) showed crude inventories at the Cushing, Oklahoma, delivery point for the U.S. oil futures contract rose last week for the first time since early July.
Emori expects oil to stay in a tight range until clearer evidence is available on the demand outlook in the United States. U.S. oil may slip to $96-$97, and while the probability is low, it may dip to $92 if that level is broken, Emori said.
The low for Brent is seen at about $100 a barrel, he added.
Oil was also supported by a weak dollar, which was near an eight-month low against a basket of currencies on Friday as traders focused on the economic impact of the acrimonious showdown in Washington that dragged the U.S. to the brink of a debt default. A weak dollar makes it cheaper for importing countries to buy oil priced in the U.S. currency.
But crude was held back by data showing implied oil demand in China, the world's second-biggest oil consumer, fell 1.8 percent in September from a year earlier to 9.61 million barrels per day (bpd), according to Reuters calculations based on preliminary government data.
"The overall outlook for oil is weak because the market is well supplied at the moment and supply fears are easing somewhat," a Singapore-based trader with a Western firm said. "Unless U.S. data surprises to the downside, we will see oil fairly range-bound."
Tension between Western powers and Iran over its disputed nuclear programme could ease, given progress in talks this week, although it could be some time before sanctions against Tehran are lifted and more of its crude flows into the market.
"Talks have progressed, but it is too early to say that we may start to see some easing of U.S. sanctions," Emori said.
Brent is expected to retest support at $108.68 and a break below that will lead to a further drop into a range of $107.71-$108.03, while a bearish target of $98.15 has resumed for U.S. oil, according to Reuters technical analyst Wang Tao.
(Editing by Alan Raybould)