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UPDATE 4-Brent rises above $109 on Ukraine tension

* Washington warns Russia of further sanctions over Ukraine

* Libya's oil output recovers to 300,000 bpd

* Investors keep tabs on Iran nuclear talks

(Updates throughout)

LONDON, May 16 (Reuters) - Brent crude oil rose above $109 a barrel on Friday as tension over Ukraine kept investors on edge, although a gradual return of Libyan oil supply capped gains.

U.S. Secretary of State John Kerry warned Russia it faced broader economic and industrial sanctions from the United States and Europe if it meddled in Ukraine's presidential elections on May 25.

Brent crude rose 31 cents to $109.40 a barrel by 1022 GMT. U.S. crude climbed 18 cents to $101.68.

"The situation with Ukraine is stopping sellers being too aggressive," said Ric Spooner, chief market analyst at CMC Markets.

Tempering the market's rise was Libya's gradual production recovery.

Output from the OPEC producer has slowly clawed back to around 300,000 barrels per day (bpd) with the El Feel and Wafa oilfields now back at work.

Protests and blockades that began last summer have kept flows far below capacity of 1.4 million bpd. And lingering unrest is likely to prevent a full recovery for some time.

Investors are also keeping an eye on talks due to end Friday over Tehran's nuclear program.

Iran could be curbing its crude exports within limits agreed in November by Tehran and the six powers as part of the interim pact which partially eased sanctions over the nuclear program.

Iran's oil exports averaged 1.11 million barrels per day (bpd) in April, the second month in a row exports have fallen, the Paris-based International Energy Agency said. That is close to the 1 million bpd allowed under November's pact.

(Additional reporting by Keith Wallis; in Singapore; Editing by William Hardy)