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UPDATE 2-Brent holds below $109 on demand growth concerns
* Asian shares extend losses, dollar near highs
* China must focus on inflation -central bank head
* Brent to fall to $106.49 -technicals
* Coming Up: U.S. weekly jobless claims; 1230 GMT (Updates prices)
By Manash Goswami and Ramya Venugopal
SINGAPORE, March 14 (Reuters) - Brent crude held steady below $109 a barrel on Thursday on concerns over demand growth from top two consumers China and the United States, while a firm dollar added pressure on prices.
Comments by China's central bank on stabilising inflation expectations reinforced investor worries it may drop its pro-growth policy before economic expansion gathers full momentum. The remarks weighed on most markets in Asia, but data showing U.S. retail sales rose at their fastest clip in five months in February provided some support to oil.
Brent crude gained 31 cents to $108.83 a barrel by 0814 GMT, swinging between a low of $108.18 to a high of $108.86. The benchmark fell for the last four sessions. U.S. oil gained 43 cents to $92.95, after sliding to $92.18.
"The IEA's report noted a subdued rate of growth in demand and that is probably weighing," said Natalie Rampono, commodity strategist at ANZ in Melbourne. "But what the market is trying to focus on is China's tightening policy. A lot of people have been pricing in a strong pickup in oil demand from China this year and some of those expectations may be pared back."
PBOC Governor Zhou Xiaochuan's comments that the central bank's stance had shifted to neutral from loose and that policy was now prudently set to rein in the risk of rising prices come days after data pointed to an uneven recovery in the economy.
Inflation hit a 10-month high in February, while annual industrial output growth in January and February combined was the lowest since October 2012.
Prices were also under pressure as crude inventories in the world's largest oil consumer rose last week, data from the Energy Information Administration showed on Wednesday.
U.S. crude inventories rose 2.62 million barrels in the week to March 8, compared with analysts' expectations for a rise of 2.3 million barrels. The rise came as crude imports increased by 227,000 barrels per day (bpd) to 7.49 million bpd.
Refinery utilization fell 1.2 percentage points to 81.0 percent of total capacity, EIA data showed, compared with expectations for a rise of 0.2 percentage point.
"Market sentiment remains weak and we're seeing continued selling because of high physical availability and weak demand," Ken Hasegawa, a commodity sales manager at Newedge in Tokyo.
Hasegawa expected Brent to slide to $107.50 and the U.S. benchmark to hold in a steady range between $91.50-$93.50 over the next few days.
Oil markets are also under pressure from a stronger dollar. The U.S. dollar hovered near seven-month highs against a basket of currencies on Thursday.
The dollar index stood at 82.905, after climbing as high as 83.055 on Wednesday as U.S. retail sales rose at their fastest clip in five months in February. The report is the latest in a string of data putting the world's biggest economy well on the recovery path.
A stronger dollar can make oil more expensive for holders of other currencies.
The IEA, which coordinates the energy policies of major consuming nations, said in its monthly oil market report it remained bearish on oil demand for 2013 and trimmed its outlook for demand growth by 20,000 bpd to 820,000 bpd.
"The subdued growth rate of oil demand now looks increasingly entrenched in the face of high oil prices and weak economic growth," it said.
Prices were also under pressure as President Barack Obama made little headway in convincing his toughest critics in Washington - House of Representatives Republicans - to accept his demand for tax increases as part of a deficit-reduction deal.
Brent is expected to break support at $107.85 per barrel and fall further to $106.49, while U.S. oil is expected to drop into a range of $90.91 to $91.40 as a rebound from the March 4 low of $89.33 has been completed. (Editing by Clarence Fernandez and Tom Hogue)
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