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Brent slips towards $110 on worries over China growth

Florence Tan
Wednesday, 19 Feb 2014 | 9:59 PM ET

* China Feb manufacturing activity slowest in 7 mths -HSBC

* Cushing stocks fall 1.8 mln bbls -API

* Brent-WTI spread narrowest since October

* Coming up: EIA weekly oil inventories data at 1600 GMT

SINGAPORE, Feb 20 (Reuters) - Brent crude slid towards $110 a barrel on Thursday, dragged down by a survey that pointed to slower growth in China, the world's second largest oil consumer.

Manufacturing activity shrank again in February to the lowest in seven months, while employment fell at the fastest pace in five years, a preliminary private survey showed.

"That is going to really knock the wind out of sales of risk assets this afternoon and probably for the next 24 hours because it is a substantial miss on estimates. I expect that it is going to have a negative impact across oil markets," said Ben Le Brun, a market analyst at OptionsXpress in Sydney.

Brent and West Texas Intermediate (WTI) could test support levels at $110 and $103 a barrel respectively, he said.

April Brent crude had slipped 42 cents to $110.05 a barrel by 0229 GMT, after settling at its highest level this year on Wednesday.

U.S. crude futures for March delivery edged down 16 cents to $103.15 a barrel. The contract closed on Wednesday, a day ahead of its expiry, at its highest since Oct. 8.

April Brent's premium to WTI <CL-LCO1=R> has fallen to the lowest since October after a new pipeline diverted excess supply from Cushing, Oklahoma, the WTI contract's delivery point, to the gulf coast. Robust heating demand this winter has also supported U.S. crude prices.

Crude stocks in Cushing fell by 1.8 million barrels in the week to Feb. 14, data from industry group the American Petroleum Institute showed. Traders are waiting for numbers from the U.S. Energy Information Administration later in the session for confirmation.

Geopolitical risks in Africa and Venezuela have partially offset the negative impact on oil from the China survey.

Domestic conflicts in Libya and South Sudan have cut their crude output, while investors eyed protests in Venezuela and the progress of Iran's nuclear talks.

Six world powers and Iran hammered out an agenda for reaching an ambitious final settlement to the decade-old standoff over Tehran's nuclear programme. A settlement could lead to the lifting of sanctions on Iran which has been curbing oil exports from the OPEC producer.

Iraq may also add to global oil supply after Iraqi Kurdistan agreed to export crude via the country's main oil marketing body, potentially removing a major sticking point in a resource row with the central government.

(Reporting by Florence Tan; Editing by Joseph Radford)