UPDATE 6-Oil steadies around $108 on euro zone economy worries

Simon Falush and Alice Baghdjian

* China HSBC flash PMI signals recovery

* Euro zone composite flash PMI lowest since June 2009

* Nigeria supply concern underpins prices

* Coming Up: EIA data 1430 GMT, Federal Reserve decision 1815 GMT

(Updates prices, paragraphs 1, 5-6) LONDON, Oct 24 (Reuters) - Brent crude oil steadied around $108 per barrel on Wednesday after a six-day losing streak as weak European data offset earlier strength prompted by signs that Chinese demand could stage a recovery. China's economy is slowly picking up from its weakest period of growth in three years, a survey of purchasing managers signalled, with new orders and output at their highest in months. But the economic outlook in Europe remained grim with businesses across the euro zone suffering their worst month since October, according to PMI data. Manufacturing PMI in Germany, Europe's largest economy, fell unexpectedly, while business sentiment dropped for the sixth consecutive month. Brent crude was down 5 cents at $108.20 a barrel by 1405 GMT and looked on track for its lowest close since early August. It fell in each of the six previous trading sessions, the longest losing streak in more than two years. U.S. oil fell 47 cents to $86.20. ``Not only do these data points support the slowing economic scenario, but the PMI manufacturing index is an energy-sensitive index and directly translates to slower energy demand,'' said Dominick Chirichella of New York's Energy Management Institute. ``All of the above said, I think it is way too early to conclude that the global economy has stopped slowing or contracting,'' he said. Brent oil hit an intraday low of $107.31 on Tuesday, the weakest since Sept. 20 and below its 100-day moving average at $107.42. The U.S. contract slumped by more than 3 percent to touch a session-low of $85.69, the lowest since July 13. Oil prices have been under pressure because of a weak demand outlook from the world's top two oil consumers.

Investors awaited inventory numbers from the Energy Information Administration (EIA) due later in the day to gauge the demand outlook for the United States. Crude inventories are seen 1.9 million barrels higher for the week ended Oct. 19. All 13 analysts forecast a build in crude stockpiles. Crude oil inventories as measured by the API increased by 313,000 barrels in the week to Oct. 19, compared with an analyst forecast for an increase of 1.9 million barrels.

SUPPLY FEARS Lower supply from Nigeria, Africa's top oil producer, has provided some support to prices, particularly Brent crude, which outperformed U.S. crude. Nigeria's oil production fell to around 2.1-2.2 million barrels per day (bpd) last week from an average of 2.5 million bpd this year, the state-oil company said, following flooding and a major outage of a Shell facility. Output is now back to normal, an oil industry regulator said on Wednesday. ``This could certainly be producing a little bit of buying interest in the spreads and therefore forcing backwardation a little wider,'' said Tony Machacek, a broker at Jefferies Bache in London. Backwardation refers to a market structure in which prices are higher for prompt delivery than for later delivery dates.

(Additional reporting by Manash Goswami and Florence Tan in Singapore; editing by Jane Baird)