* China factory activity slows in Dec - govt, HSBC
* U.S. crude inventories fell by 5.7 mln bbls last week - API
* South Sudan President declares state of emergency in two states
* Coming up: U.S. Dec ISM Manufacturing PMI; 1500 GMT
(Adds quote, updates prices)
LONDON, Jan 2 (Reuters) - Brent crude slipped below $111 a barrel on Thursday on slowing economic expansion in China, the world's no. 2 oil consumer, but supply cuts in Libya and South Sudan kept losses in check.
Growth in factory activity in China, the world's second largest oil user, slowed in late 2013, according to purchasing managers' indexes published by the government and HSBC, weighed down by shrinking export orders.
"The Chinese PMI data were not exactly bullish," IHS oil consultant Victor Shum said.
Brent crude fell 40 cents from Tuesday to $110.40 a barrel by 1145 GMT. U.S. crude was off 14 cents at $98.28. Markets were shut on Wednesday for the New Year.
"The oil market appears to be running out of steam," said Christopher Bellew, broker at Jefferies Bache.
The average Brent price for 2013 was $108.70 in 2013, down 2.7 percent from $111.68 in 2012 in a well-supplied market despite disruptions in the Middle East, Africa and North Sea.
Production in Libya, Iran, Iraq and the United States will be closely watched this year, in addition to any signs of further stimulus tapering by the U.S. Federal Reserve.
In Libya, oil output is still less than 250,000 barrels per day (bpd), down from 1.4 million bpd in July, as ports in the eastern part of the country remain shut.
South Sudanese President Salva Kiir declared a state of emergency in two states on Wednesday as his negotiators prepared for peace talks with rebels to end more than two weeks of violence that has pushed the country towards civil war.
Iran and six world powers will implement an agreement in late January obliging Tehran to suspend its most sensitive nuclear work, an Iranian official was quoted as saying on Tuesday.
That raises the prospect of an increase in Iranian crude exports over 2014, according to some analysts.
"It may be six months or more before all of the Iranian oil returns to the market - and it will depend on Iran's political compliance," Jason Schenker, president of consultancy Prestige Economics said in a note.
"When that happens, however, Brent crude oil prices could fall swiftly."
Data from the American Petroleum Institute on Tuesday showed a drop of 5.7 million barrels in U.S. crude stockpiles, nearly double the 3-million-barrel draw expected by analysts surveyed by Reuters.
The U.S. Energy Information Administration (EIA) will release its data on Jan. 3 due to the holiday.
Lower U.S. inventories helped buoy the West Texas Intermediate (WTI) oil price in 2013. The average for the past year was $98.05 a barrel, up 4.2 percent from $94.14 in 2012.
(Additional reporting by Florence Tan in Singapore; Editing by William Hardy)