UPDATE 5-Oil steady around $112 as growth worries weigh

* Weak demand outlook to pressure oil, supply risks remain

* Iranian rial falls 9 pct versus dollar as sanctions bite

* Iraqi oil output rises, government adviser says

* Coming up: API weekly oil stocks; 2030 GMT

(Updates prices; paragraph 3)

By Christopher Johnson and Alice Baghdjian

LONDON, Oct 2 (Reuters) - Brent crude oil consolidatedaround $112 a barrel on Tuesday as investors weighed a weakeroutlook for fuel demand and sluggish economic growth against therisk of possible supply disruptions.

Global economic activity has slowed this year, curbing thegrowth in fuel demand in Asia, Europe and the United States, butinvestors are worried an unexpected disruption to supplies fromthe Middle East or elsewhere could force prices higher.

Brent crude oil futures for November were down 2cents at $112.17 a barrel by 1335 GMT. U.S. crude rose 14cents to $92.62.

U.S. manufacturing unexpectedly grew last month for thefirst time since May but euro zone factories suffered theirworst quarter since early 2009 and China lost steam.

"Economic data is bearish for oil and the immediate risk forprices is to the downside," said Tamas Varga, oil analyst atbrokers PVM Oil Associates in London.

"But geopolitics is supporting the market. It may be veryunlikely, but investors are still worried there could be a warin the Middle East. And, as long as stories about Iraniannuclear operations keep coming, those worries are not going togo away."

Tension between Iran and the West is high with the UnitedStates and Europe imposing sanctions on the Islamic Republic inan attempt to stop the development of an Iranian nuclear bomb.

This has removed around 1 million barrels per day (bpd) ofIranian crude oil from the global market and put massivepressure on the Iranian economy.

Iran's rial plunged at least 9 percent to a record low ofabout 37,500 to the dollar on Tuesday.

The top energy adviser to the Iraqi prime minister said onTuesday Iraqi oil production was likely to hit 3.4 million bpdby the end of this year, while exports are expected to average2.9 million bpd in 2013.

These forecasts are considered optimistic by many industryanalysts but the rise in Iraqi oil production is going some waytowards replacing lost Iranian barrels and has added to amplesupplies from other producers.

"There's no supply shortage at all at the moment," saidCarsten Fritsch, oil analyst at Commerzbank in Frankfurt.

<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Brent 24-hour technical outlook: WTI 24-hour technical outlook: ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> SLOWDOWN

An even more unstable Iran would pose risks for the MiddleEast, the world's most important exporter of oil, but mostinvestors think the chances of war are low, despite bellicoserhetoric on both sides.

Of more immediate concern to markets is the global economicslowdown that has pushed many European countries into deeprecession. European manufacturing activity has fallen to levelsnot seen since early 2009.

Spain could be about to request a euro zone bailout althoughit could face resistance from Germany, European officials havesaid, suggesting a solution to the crisis remains elusive.

The debt crisis that began in Greece in 2010 and has spreadacross the euro zone to engulf Ireland, Portugal, Cyprus and themuch bigger economy of Spain has devastated business confidenceand sapped the ability of companies to create jobs.

Federal Reserve Chairman Ben Bernanke said on Monday he wasconfident the U.S. economy would not slip into a secondrecession, although growth in the world's largest oil consumerwas too slow.

Investors awaited U.S. industry data later on Tuesday on thelevel of fuel inventories.

A Reuters poll of analysts forecast the American PetroleumInstitute figures would show a build of 1.5 million barrels incrude stocks last week on expectations of a rebound in crudeimports. Gasoline and distillate stockpiles were expected tofall slightly.

(Additional reporting by Luke Pachymuthu and Manolo Serapio Jr;Editing by Alison Birrane)

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Keywords: MARKETS OIL/