Brent slips toward $110 as US fiscal cliff deadline draws near

* Jitters about looming U.S. budget deadline cap oil prices

* Brent set to average above $111/bbl in 2012, vs $110.91 last year

* U.S. crude 2012 average at $94/bbl, down from $95.11 in 2011

By Florence Tan

SINGAPORE, Dec 31 (Reuters) - Oil slipped on Monday for a third straight session, with Brent holding above $110 per barrel, on worries the United States may not reach a deal by Jan. 1 to prevent a fiscal crisis that could erode fuel demand at the world's largest oil consumer.

Democrats and Republicans remained at loggerheads on Sunday over a deal that would prevent the United States from tumbling over a "fiscal cliff" of sharp spending cuts and higher taxes for all Americans.

While analysts are optimistic there will be a breakthrough in U.S. talks, the lack of a deal yet with the deadline just a day away is keeping a ceiling on prices of riskier assets.

Brent crude fell 30 cents to $110.32 a barrel by 0234 GMT after hitting a low of $110.08 earlier in the session. U.S. crude was at $90.59, down 21 cents.

Brent is headed for a fourth straight yearly gain and set to log a record high annual average settlement price, while U.S. crude was on track for a drop this year after three consecutive annual gains.

"The market is nervous about it," said Jonathan Barratt, chief executive officer at Barratt's Bulletin, a Sydney-based research firm, referring to the so-called U.S. fiscal cliff. But "at the end of the day a deal would be done," he said.

He added that the optimism has kept Brent trading at the top of a price range between $100 and $110 a barrel.

The next hurdle for the U.S. government would be to raise its debt ceiling in the next few weeks to avert a default that may lead to another credit downgrade and cause panic in the financial markets.

In China, the world's second-largest economy, factory activity expanded at its fastest rate in December since May 2011, reinforcing signs of a steady recovery.

HIGHEST AVERAGE BRENT PRICE EVER

Front-month Brent is set to log a record high average settlement price at more than $111 a barrel this year. Supply worries stemming from Middle East tensions and disruptions in the North Sea have helped oil prices shrug off headwinds from a global economic slowdown that has cut oil demand.

Brent hit a high of $128.40 a barrel in March and slipped to a low of $88.49 in June.

Slow economic growth and ample supplies are expected to keep a lid on oil next year with crude prices gradually slipping lower. Brent crude will average at $108 a barrel in 2013, a Reuters monthly survey of 26 analysts showed.

The United States is pumping the most oil in 19 years after shale oil discovery pushed production to nearly 7 million barrels per day while its crude imports slipped to the lowest in 12 years, government data showed.

World's top oil exporter Saudi Arabia expects production hikes by other oil producers to weigh on energy prices in 2013, potentially cutting into the country's fiscal surplus.

But geopolitical tensions in the Middle East are expected to underpin oil prices.

On Friday, Iran started six days of naval drills in the Strait of Hormuz, a vital oil and gas shipping route, the official IRNA news agency reported.

Iran has previously threatened to disrupt or close the waterway if its nuclear sites are subjected to military attack by Israel or the United States. (Editing by Himani Sarkar)

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CORRECTED-UPDATE 2-Brent slips towards $109 as U.S. fiscal talks stall

(Corrects third paragraph to say U.S. crude is set to rise, not slide, for the week.)

* Boehner abandons fiscal cliff plan as Republicans balk

* Stokes worries about demand from world's biggest oil consumer

* Brent's target at $111.45 aborted -technicals

* Coming Up: U.S. durable goods orders Weekly; 1330 GMT

By Florence Tan and Manash Goswami

SINGAPORE, Dec 21 (Reuters) - Brent crude fell towards $109 a barrel on Friday after talks in the United States to reach an agreement to resolve a budget crisis stalled, reviving worries about demand in the world's biggest oil consumer.

Republican lawmakers failed to back an effort to head off $600 billion worth of indiscriminate tax hikes and spending cuts that threaten to push the U.S. economy into recession next year. The dramatic twist, coming after growing optimism just a few days earlier of an agreement, weighed on Asian shares, the euro and base metals.

Brent crude slipped 57 cents to $109.63 a barrel by 0439 GMT, declining for a second day. The contract is set to rise for a second week. The stalemate had a larger impact on U.S. oil, which fell as low as $88.93 and traded $1 lower at $89.13. It is set to rise nearly 3 percent this week.

"The latest news that came out just a few hours ago has caused the broader markets to sell," said Victor Shum, managing director at IHS Purvin & Gertz. "There's a view that it's a setback for talks between the Republicans and the White House."

Only 11 days are left to prevent automatic tax hikes and spending cuts, referred to as the fiscal cliff, and House of Representatives Speaker John Boehner faced an embarrassing setback when he failed to unite his lawmakers as many conservative Republicans are opposed to tax hikes on the richest wage-earning Americans.

A bullish target at $111.45 per barrel has been temporarily aborted for Brent as it was unable to break resistance at $110.50, while U.S. oil is expected to hover around resistance at $90.30 or retrace moderately to $89, according to Reuters technical analyst Wang Tao.

But the overall outlook for oil demand growth looks set to improve for 2013 on the back of signs of a recovery in the U.S. economy, said Ric Spooner, chief market analyst at CMC Markets.

DEMAND OUTLOOK

The U.S. economy grew faster than previously thought, at a 3.1 percent annual rate in the third quarter, the Commerce Department said. It was the fastest pace since late 2011 and more than double the second quarter's 1.3 percent rate.

Other data showed factory activity in the mid-Atlantic region picked up this month, while home resales in November were the best in three years, indicating the economy retained some vigor early in the fourth quarter.

"The numbers provide a sound spring board for an improved growth outlook for the United States in 2013," Spooner said.

Spooner expects Brent to trade between $100 and $120 a barrel next year and the U.S. contract in a $80-$95 range.

A key factor pushing prices out of the range in the upper end is an escalation in the geopolitical crisis in the Middle East. Brent rose to a high of $128 a barrel and has stayed above $100 through most of the year on supply disruption worries as tensions over Iran's controversial nuclear programme escalated.

But an uncertain global economic outlook and Europe's long drawn out sovereign debt crisis have kept gains in check.

"Any increase in threat or physical damage to infrastructure will lead to spike in prices. Although we have surplus capacity, there isn't so much of a surplus to absorb a severe disruption," Spooner said. "The progress in resolving Europe's debt crisis will be a source of concern and weigh on the market." (Reporting by Florence Tan and Manash Goswami; Editing by Chris Gallagher)

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UPDATE 3-Brent slips below $110 as U.S. fiscal talks stall

* Boehner abandons fiscal cliff plan as Republicans balk

* Stokes worries about demand from world's biggest oil consumer

* Brent's target at $111.45 aborted -technicals

* Coming Up: U.S. durable goods orders, weekly; 1330 GMT (Updates prices)

By Florence Tan and Manash Goswami

SINGAPORE, Dec 21 (Reuters) - Brent crude fell below $110 a barrel on Friday after talks in the United States to avert a budget crisis stalled, reviving worries about demand in the world's biggest oil consumer.

Republican lawmakers failed to back an effort to head off $600 billion worth of indiscriminate tax hikes and spending cuts that threaten to push the U.S. economy into recession next year. The dramatic twist, coming after growing optimism just a few days earlier of an agreement, weighed on Asian shares, the euro and base metals.

Brent crude slipped 54 cents to $109.66 a barrel by 0809 GMT, declining for a second straight day, but on track for a second weekly rise.

The U.S. stalemate had a larger impact on NYMEX crude for February delivery, which dropped to as low as $88.93 and was trading down 91 cents at $89.22. But prices are on track for an almost 3 percent rise this week, its biggest such gain since mid-August, led by a rally earlier in the week on hopes of a U.S. fiscal deal at the time.

"The latest news that came out just a few hours ago has caused the broader markets to sell," said Victor Shum, managing director at IHS Purvin & Gertz, referring to U.S. House of Representatives Speaker John Boehner's failure to round up Republican support for his bill.

"There's a view that it's a setback for talks between the Republicans and the White House."

Only 11 days are left to prevent automatic tax hikes and spending cuts, referred to as the fiscal cliff.

A bullish target at $111.45 per barrel has been temporarily aborted for Brent as it was unable to break resistance at $110.50, while U.S. oil is expected to hover around resistance at $90.30 or retrace moderately to $89, according to Reuters technical analyst Wang Tao.

But the overall outlook for oil demand growth looks set to improve for 2013 on signs of a recovery in the U.S. economy, said Ric Spooner, chief market analyst at CMC Markets.

DEMAND OUTLOOK

The U.S. economy grew faster than previously thought, at a 3.1 percent annual rate in the third quarter, the Commerce Department said. It was the fastest pace since late 2011 and more than double the second quarter's 1.3 percent rate.

Other data showed factory activity in the mid-Atlantic region picked up this month, while home resales in November were the best in three years, indicating the economy retained some vigour early in the fourth quarter.

"The numbers provide a sound spring board for an improved growth outlook for the United States in 2013," Spooner said.

Spooner expects Brent to trade between $100 and $120 a barrel next year and the U.S. contract in a $80-$95 range.

A key factor pushing prices out of the range in the upper end is an escalation in the geopolitical crisis in the Middle East. Brent rose to a high of $128 a barrel and has stayed above $100 through most of the year on supply disruption worries as tensions over Iran's controversial nuclear programme escalated.

But an uncertain global economic outlook and Europe's festering sovereign debt crisis have kept gains in check.

"Any increase in threat or physical damage to infrastructure will lead to spike in prices. Although we have surplus capacity, there isn't so much of a surplus to absorb a severe disruption," Spooner said.

"The progress in resolving Europe's debt crisis will be a source of concern and weigh on the market." (Editing by Himani Sarkar)

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Hong Kong shares have worst day in 3 weeks, China slips too

* HSI -0.8 pct, H-shares -1.1 pct, CSI300 -0.5 pct

* Investors cut risk ahead of holiday next week on cliff concerns

* A-shares outperform HK 3rd week in a row

* China alcohol sector hit by more contamination reports

By Clement Tan

HONG KONG, Dec 21 (Reuters) - Hong Kong shares suffered their worst loss in three weeks on Friday as investors reduced risky holdings at the end of the year's last full trading week when the Republican House Speaker abandoned his Plan B bill to avert a "fiscal cliff"."

Onshore Chinese markets also fell, with weakness in alcohol and resource-related sectors helping trim index gains on the week, but they are still set to outperform offshore peers for a third straight week.

The Hang Seng Index went into the midday trading break down 0.8 percent at 22,486.7, slipping from a 17-month high. If losses persist, this would be its worst day since Dec. 3. The benchmark is now down 0.5 percent on the week.

The China Enterprises Index of the top Chinese listings in Hong Kong fell 1.1 percent. It is now down 0.7 percent on the week. Both Hong Kong indexes are set for their first weekly loss in five.

On the mainland, the Shanghai Composite Index and the CSI300 of the top Shanghai and Shenzhen listings each fell 0.5 percent. On the week, they are still set for a third-straight weekly gain, up 0.3 and 0.8 percent.

"It certainly looks like people are cutting risk (in Hong Kong) before the holidays next week, but things are not that bad," said Benjamin Chang, chief executive officer of LBN Advisors, a firm that manages more than $400 million in two China funds.

Republican lawmakers delivered a stinging rebuke to their leader, House of Representatives Speaker John Boehner, late on Thursday when they failed to back an effort designed to extract concessions from President Barack Obama in fiscal cliff talks.

On Friday, Chinese banking and energy majors were among the biggest losers of the Hang Seng Index components. Industrial and Commercial Bank of China (ICBC) dived 2.1 percent, while China Coal Energy Co Ltd fell 1.8 percent.

A more than 40 percent bounce from July 12 lows had helped ICBC had return to its highest since early March on Thursday. Friday's losses trimmed ICBC's gains on the year to 18.9 percent, compared to the 22 percent jump on the Hang Seng Index.

Chinese alcohol counters were hit by fresh mainland media reports of more products containing the toxic plasticizer elements, crimping a mild December rebound from the November rout suffered when the first allegations first emerged.

Jiugui Liquor fell 3.3 percent, while the sector's premium brand Kweichow Moutai fell 0.6 percent. Moutai is now up 0.5 percent on the month after diving 12.7 percent in November, its worst monthly loss in more than two years.

Gold miners were also weak as gold prices neared four-month lows, as investors took profit on rare earth producers which outperformed earlier this week.

Shandong Gold shed 1.5 percent, while Inner Mongolia Baotou Steel Rare-Earth Group lost 1.7 percent, cutting its weekly gain to 11.8 percent.

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Brent slips to $110, stalled US fiscal talks dent demand outlook

* U.S. crude and distillate stocks fall, capping oil price loss

* Promising German data supports sentiment

By Jessica Jaganathan

SINGAPORE, Dec 20 (Reuters) - Brent crude slipped on Thursday to trade near $110 a barrel as investors took profits from recent gains after talks to avert a U.S. fiscal crisis stalled, stoking worries about demand from the world's biggest oil consumer.

As a year-end deadline nears, U.S. President Barack Obama and House of Representatives Speaker John Boehner remained locked in intense bargaining over a possible deal to avoid the so-called fiscal cliff of harsh tax hikes and automatic spending cuts that could badly damage an already weak economy.

Significant progress seemed to have been made earlier this week with both Obama and Boehner offering substantial concessions, but talks turned sour again with Obama accusing opponents of holding a personal grudge against him while the top Republican negotiator called the president "irrational".

"Negotiations are (not progressing) which is probably why we're seeing a sell-off today and the risk sentiment coming off," said Natalie Rampono, a commodities analyst at ANZ in Melbourne. "The markets are being directed by sentiment from the U.S. fiscal cliff talks and so that will have the biggest influence on prices at the moment."

Brent crude slipped 35 cents to $110.01 a barrel by 0340 GMT, after settling $1.52 higher in the previous session which was the biggest one-day gain since Nov. 19.

U.S. oil fell 40 cents to $89.58.

While investors still believe the United States will be able to avert a fiscal crisis, oil prices and other riskier assets will remain under pressure as the deadline comes closer with no signs of a deal yet.

However, a patch of promising data from Germany and the United States kept a floor under prices.

Morale at German businesses climbed in December as their confidence in the outlook rose at its fastest rate in 2-1/2 years, boosting hopes Europe's largest economy will bounce back quickly after a weak end to 2012.

Also adding to positive sentiment was data showing U.S. homebuilding permits touched their highest level in nearly 4-1/2 years in November.

Investors are now eyeing weekly U.S. data on jobless claims due later on Thursday for further clues on the country's economic health.

U.S. STOCKS DRAWDOWN SUPPORTS

Oil prices also found early support from a drop in U.S. crude oil and distillate stocks.

Crude stocks fell by 964,000 barrels to 371.65 million barrels, compared with an average analyst forecast for a 1.1 million barrel drawdown in a Reuters poll. Crude imports fell 101,000 barrels per day (bpd) to 8.36 million bpd.

Distillates, which include diesel and heating oil, fell 1.09 million barrels to 116.97 million barrels, versus analyst expectations for a 1 million-barrel build.

"Oil prices could get a little bit of support ... in the slight pick up in heating oil demand with the drop in distillate inventory being greater than expectations ... So if product prices increase, that could sometimes influence oil market sentiment," Rampono said.

Oil prices could also be underpinned by a little-noticed provision in U.S. sanctions against Iran beginning in February that is likely to trap payments abroad for its oil exports running into billions of dollars.

The provision could halt most of the flow of petrodollars to Iran, given that the value of its oil exports is far higher than what it imports from its biggest customers - China, South Korea, India and Japan.

Sanctions on financial transactions with Iran have already made it difficult for buyers to pay for oil from the OPEC producer, triggering supply worries and supporting oil prices. (Editing by Himani Sarkar)

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Hong Kong shares hit near 17-mth high, China slips on weak property

* HSI +0.7 pct, H-shares +0.8 pct, CSI300 -0.2 pct

* China Shenhua climbs on news of Australia interest

* Esprit slumps, profit warning triggers downgrades

* China property weak again in the mainland

By Clement Tan

HONG KONG, Dec 19 (Reuters) - Hong Kong shares touched a 17-month high on Wednesday, buoyed by renewed hopes of a deal in the U.S. on spending cuts and tax hikes, but looming chart resistance could limit a market rally into the year's end.

Weakness in property stocks, standout outperformers this year, dragged mainland markets into the red. A fourth monthly price increase in five for home prices, on top of Beijing's reiteration that curbs will remain in place in 2013, has hurt the sector this week.

The Hang Seng Index went into the midday trading break up 0.7 percent at 22,652.8, its highest intra-day level since Aug. 1, 2011. Stiff chart resistance is next seen at about 22,800, peaks reached in July-August 2011.

The China Enterprises Index of the top Chinese listings in Hong Kong climbed 0.8 percent to its highest since March 12. It is now up 14.7 percent on the year, compared with the 22.9 percent jump on the Hang Seng Index.

In the mainland, the Shanghai Composite Index and CSI300 of the top Chinese listings both slipped 0.2 percent. Shanghai midday volume was its lowest since last Thursday.

The CSI300 has bounced up 12 percent since Dec. 3, when it was at its lowest since early 2009. The index, which fell in both 2010 and 2011, is now up 0.7 percent on the year. The Shanghai Composite is down 1.8 percent in 2012.

"I won't be surprised if turnover drops off as we close out 2012 and people go on holiday, stalling the rally. Most investors are already looking to the new year," said Edward Huang, Haitong International Securities' equity strategist.

"I think the market might be too optimistic on the pace of reform or additional policy support that the incoming Chinese leadership will take in 2013," Huang added.

On Wednesday, Chinese banking and energy majors were among the biggest boosts to the Hang Seng Index. The mainland's two largest banks, Industrial and Commercial Bank of China (ICBC) and China Construction Bank (CCB) rose 0.9 and 1.3 percent respectively.

China Shenhua Energy Co Ltd climbed 2.6 percent to its highest in a month in Hong Kong and 0.8 percent in Shanghai.

The Australian Financial Review reported that China's biggest coal producer was told to come back with a full takeover offer after it had talked to Australia's Whitehaven Coal about taking a stake.

Chinese property shares in the onshore market were weak again, although those listed in Hong Kong rebounded after two days of falls.

Poly Real Estate shed 1.5 percent in Shanghai, but China Resources Land rose 1.7 percent in Hong Kong.

ESPRIT TAKES A TUMBLE

Bucking broader market strength, Esprit Holdings tumbled 5.7 percent to its lowest since Nov. 14, shaving 2012 gains to 19 percent after the Europe-focused retailer warned of a possible loss for the six months ending in December, triggering a raft of broker downgrades.

Morgan Stanley downgraded Esprit to "underweight" from "equal weight" while revising its earnings forecast for the year ending in June 2013 to a net loss of HK$144 million from the previous HK$695 million profit.

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