UPDATE 3-Brent steadies near $108 on Ukraine diplomacy

* EU leaders set to warn, not sanction Russia

* U.S. crude stocks rise more than expected

* U.S. jobs data, services data point to lower oil demand

(Updates previous SINGAPORE)

LONDON, March 6 (Reuters) - Brent crude steadied around $108 a barrel on Thursday as the West and Russia engaged in high-stakes diplomacy to cool the crisis in Ukraine.

The North Sea benchmark has fallen $4 since peaking on Monday, when investors grew concerned over the crisis between Ukraine and Russia.

European Union leaders meeting in Brussels were set to warn but not sanction Russia, whose forces have seized control of Ukraine's Crimea region. The foreign ministers of Russia and the United States are due to meet again on Thursday in Rome. ID:nL6N0M30ZX

"The market has collectively come to the conclusion that an armed conflict in Ukraine is not on the cards, so we've seen speculative positions being sold off," said Michael McCarthy, chief strategist at CMC Markets.

"Combined with the strength in crude supply in the United States, there doesn't seem to be much upside for oil at least in the short term," McCarthy said.

Brent was up 19 cents at $107.95 at 1049 GMT, after settling $1.54 lower. The contract hit $112.39 on Monday, its highest since Dec. 30.

U.S. crude was 16 cents lower at $101.29, after dropping $1.88 in the previous session.

Oil was pressured further by a larger than expected rise in U.S. crude stocks and data showing private employers in the United States added fewer workers than forecast in February.

U.S. crude oil stockpiles rose more than expected last week as imports increased and refinery output fell, data from the Energy Information Administration (EIA) showed on Wednesday.

Crude oil inventories rose by 1.4 million barrels in the week ending Feb. 28, compared with analyst expectations for a build of 1.3 million barrels.

Crude stocks at the U.S. WTI benchmark delivery point in Cushing, Oklahoma, fell for a fifth straight week, following the start-up of the Keystone XL pipeline to the Gulf coast.

Further weighing on oil demand, U.S. oil refiners are expected to take 1,608,000 bpd of capacity offline in the week ending March 7, up from 1,412,000 bpd the previous week, data from research company IIR showed.

(Additional reporting by Jacob Gronholt-Pedersen in Singapore; editing by Tom Pfeiffer)