UPDATE 8-Oil falls as economic data dims demand outlook

* China, Europe services PMI disappoint

* U.S. RBOB gasoline futures continue sell off

* U.S. crude stocks dip unexpectedly - EIA

(Recasts, updates prices, market activity; changes byline and dateline, pvs LONDON)

By Robert Gibbons

NEW YORK, Oct 3 (Reuters) - Oil prices fell sharply on Wednesday as disappointing economic data from China and Europe reinforced concerns about slowing growth and weak petroleum demand, even as supportive U.S. data strengthened the dollar.

U.S. November RBOB gasoline futures

retreated a second straight session, helping pressure U.S. crude to a two-month low. Gasoline's session low of $2.7538 a gallon put front-month futures down more than 58 cents from where October futures settled and went off the board last Friday.

With the poor economic data, investors shrugged off any supportive sentiment that might have been expected to accrue from the U.S. Energy Information Administration's weekly inventory report. The report showed U.S. crude stocks fell 482,000 barrels last week, against forecasts stockpiles would be up 1.5 million.

"The global economy is in a rut and even with supportive EIA data crude is down," said Dan Flynn, an analyst at Price Futures Group in Chicago.

Brent November crude

fell $2.49 to $109.08 a barrel by 12:45 p.m. EDT (1645 GMT), having fallen to $108.20, lowest since Sept. 20.

Brent started Wednesday after the previous session's settlement was below two significant technical support levels on charts of price movements - the 50-day moving average at $112.06 and the 200-day moving average at $112.09. These technical levels are closely watched by traders.

U.S. November crude was down $2.54 at $89.35 a barrel, slumping below its 100-day moving average of $89.99, having dropped as far as $88.64, its lowest since Aug. 3.

In addition to the slump in U.S. gasoline

, which fell more than 6 cents, heating oil joined in the retreat, falling 4 cents.


Dwindling new orders and more layoffs marked a worsening decline for euro zone companies last month, according to business surveys released on Wednesday. Markit's Eurozone Composite Purchasing Managers Index (PMI) fell to 46.1 in September from 46.3 in August.

China's normally robust services sector weakened sharply in September to its lowest point since November 2010 as slow growth in manufacturing began to feed through to the rest of the economy, an official survey showed.

China's official purchasing managers' index for the services sector fell to 53.7 in September from 56.3 in August.

Highlighting the faltering economy's effect on oil consumption, retail sales in the euro zone barely rose in August as motorists cut back spending on fuel during the normally busy driving months in the summer.

"There's little to be cheerful about. There's worry about whether Spain will ask for a bailout or not and there's major uncertainty around China," said Filip Petersson, an analyst at SEB in Stockholm. "It's difficult to be bullish at the moment."



ADP/U.S. Labor Department data comparison:

Markit PMI: U.S., euro zone, China:

Brent 24-hr chart analysis: WTI 24-hour chart analysis:


(Additonal reporting by Simon Falush and Peg Mackey in London and Ramya Venugopal aand Wang Tao in Singapore; editing by Andrew Hay)

((robert.gibbons@thomsonreuters.com)(+1 646 223 6059)(Reuters Messaging: robert.gibbons.reuters.com@reuters.net))

Keywords: MARKETS OIL/