* Iran, world powers may be near interim nuclear deal
* U.S. added more jobs than forecast in Oct
* Heavy fighting rocks Libyan capital
(New throughout, updates prices, changes dateline, pvs LONDON)
NEW YORK, Nov 8 (Reuters) - Brent oil bounced off a four-month low on Friday and traded marginally higher after data showed the United States added far more jobs last month than forecast, while traders kept close watch over a meeting between Western powers and Iran over its nuclear program.
U.S. oil prices bounced higher and lower as the market tried to find its footing with some traders taking solid jobs growth to mean that the U.S. Federal Reserve would pull back on its quantitative easing program earlier than expected.
Six western nations and Iran were expected to iron out an agreement during a meeting in Geneva on Friday that could ease sanctions against Iran, which have removed more than 1 million barrels per day (bpd) of oil from world markets. Any increase in supply from the Islamic Republic could hit prices hard.
Brent was up 33 cents at $103.79 a barrel by 10:47 a.m. EST (1547 GMT), after trading as low as $102.98, the lowest since early July.
U.S. oil was up 3 cents $94.23 a barrel, after dropping to a session low of $93.90.
U.S. oil briefly turned negative earlier in the session after U.S. Labor Department data showed a rise of more than 200,000 jobs last month.
The positive economic data sparked fears that the U.S. Federal Reserve may pull the brake on its quantitative easing program, which would dampen demand for oil.
"The better-than-expected non-farm payrolls fed brief fear that Fed will taper earlier but we've bounced off that," said Gene McGillian, analyst with Tradition Energy in Stamford, Connecticut.
Brent's premium over West Texas Intermediate (WTI), the grade of crude oil underpinning the U.S. oil futures contract, <CL-LCO1=R> narrowed by 66 cents to a three-week low of $8.60 per barrel. It was last trading at $9.53.
Brokers said the spread had been oversold, and funds were squaring positions.
"We're back to tracking economic indicators and keeping an eye on Geneva today," McGillian added.
A deal between the six Western nations and Iran was not yet imminent, U.S. Secretary of State John Kerry said early on Friday, noting that "there are some important gaps that have to be closed."
One of the ideas under consideration is the disbursement in instalments of up to around $50 billion of Iranian funds frozen in foreign accounts for many years. There could also be a temporary relaxation of trade restrictions, diplomats say.
MIDDLE EAST/CHINA SUPPORT
Oil got further support from fresh civil unrest in Libya, where some of the worst fighting in months broke out in Tripoli on Thursday.
News that Saudi Arabia cut its crude output in October to 9.75 million bpd from 10.1 million in September, also helped keep a floor under prices. The figures were given to Reuters by an industry source familiar with the matter.
Chinese economic data also offered support, showing a rebound in export growth from the world's second-biggest oil consumer, though Chinese crude oil imports fell to a 13-month low after hitting a record high in the previous month.
Still, both Brent and U.S. oil were on track for their fourth and fifth straight weeks of losses, respectively, as oil markets remain well supplied.
The apparent improvement in relations between Iran and the West is raising the possibility of even more supply, analysts said.
"The theme is overwhelmingly bearish," VTB Capital oil and commodities strategist Andrey Kryuchenkov said. "The long-term fundamental picture (for supply) is comfortable anyway you look at it."
(Additional reporting by Christopher Johnson in London; Editing by Marguerita Choy)