UPDATE 9-Oil rises to 8-month high on Iran, China moves

* Iran halts supply to Britain and France
* China policy easing, Greek bailout hopes support
* Brent in euro terms the highest since July 2008

(Recasts lead, updates prices)
By Ikuko Kurahone
LONDON, Feb 20 (Reuters) - Oil prices climbed to their
highest in more than eight months on Monday, pushing Brent crude
above $120 a barrel as Iran cut off oil exports to Britain and
France while economic developments in Asia and Europe lifted
riskier assets.
Monetary policy easing by China, hopes for a Greek bailout
and a slide in the U.S. dollar buoyed prices, which have risen
more than 8 percent this month to trade at their highest since
the Libyan civil war constricted exports last April and May.
Hedge funds have also boosted their bullish bets on oil to the
highest since May, according to regulatory data.
Brent crude rallied as high as $121.15 a barrel
during the thinly traded day, but later pared gains as traders
reckoned that Iran's retaliatory ban on shipments to the UK and
France had more political than practical impact.
April Brent settled at $120.05 a barrel, up 47 cents or 0.4
percent on the day, the first close above $120 since June 15.
Trading volume of under 140,000 lots was only about one-quarter
the daily average due to the U.S. President's Day holiday.
"Banning the tiny quantities of exports to the UK and France
involves very little risk for Iran - indeed quite the opposite,
it catches the headlines and leads to a higher global oil price,
which is something Iran is very keen to encourage," said
Caroline Bain, analyst at the Economist Intelligence Unit.
In euro terms, Brent crude is nearing the record hit in
summer 2008, according to Reuters data.
U.S. crude outpaced Brent's gains as some traders
took more profits on the Brent/WTI spread, which narrowed to
less than $15 a barrel, its thinnest in over two weeks.
March WTI, which expires on Tuesday, rose $1.68 a barrel to
$104.92 a barrel, trading at its highest since May 5, the day
that oil prices abruptly collapsed by more than $10 a barrel
following their Libyan war run-up. The New York Mercantile
Exchange will not issue a settlement price due to the holiday.
March U.S. gasoline futures rose 1.2 percent to
$3.0511 a gallon on Monday after a fire on Friday idled BP Plc's
225,000 barrel per day (bpd) Cherry Point, Washington,
refinery. BP has not said when it might resume operations at the
plant, which accounts for 9 percent of West Coast capacity.
U.S. gasoline futures prices have risen by more than 20
percent since mid-December, raising concerns among some analysts
about the impact on global economic growth, which has shown
signs of finally gathering steam in recent weeks. U.S. housing
data and German sentiment indicators this week will provide
fresh clues on the status of the long-awaited rebound.

IRAN RETALIATES
Iran, OPEC's second-largest producer, ordered a halt to its
oil sales to British and French firms on Sunday in retaliation
against tightening EU sanctions as ties with the West remained
strained over its disputed nuclear programme.
But the announcement came after European oil buyers had
already made big cuts in purchases from Iran months ahead of the
sanctions. Britain has imported almost no oil from Iran over the
last year, EU data show.
Fears of supply disruption in Iran and upbeat economic data
from the world's largest oil user, the United States, have
pushed oil prices up over the past month.
JP Morgan Chase raised its 2012 price forecast for
Brent crude by $6 to $118 a barrel on supply risks and rising
economic growth. It also raised its forecast for 2013 to $125 a
barrel, up from $121.
Political issues in Iran, Syria, Sudan/South Sudan, Nigeria
and elsewhere are creating increased demand for crude stocks,
analysts led by Lawrence Eagles said in a Feb. 19 note.
Speculators sharply raised their net long positions in the
week to Feb. 14, data from the U.S. Commodity Futures Trading
Commission showed on Friday. [ID;nEMS2UF2LX]

CHINA, GREECE
Investors' appetite for riskier assets rose after China's
central bank on Saturday cut banks' required reserve ratio
(RRR), boosting lending capacity by more than $50 billion and
supporting the demand outlook for commodities from the world's
second-largest economy.
Expectations Greece will secure a debt bailout this week
also supported oil prices.
Euro zone finance ministers are expected to approve a second
rescue package for Greece at a meeting on Monday, a move to put
the country on a more stable financial footing and keep it
inside the single currency region.

(Additional reporting by Florence Tan in Singapore, Christopher
Johnson in London and Jonathan Leff in San Francisco; Editing by
Alison Birrane and Jane Baird)