UPDATE 7-Oil rises on weak dollar, Chinese growth data
* China's Q3 GDP rises 7.8 percent
* Weak U.S. dollar boosts commodities
* For the week, oil down 1.2 pct
* U.S. oil demand higer in Sept -API (New throughout, updates prices and market activity to settlement)
By Anna Louie Sussman and Jeanine Prezioso
NEW YORK, Oct 18 (Reuters) - Oil prices settled moderately higher on Friday as China reported that its economy grew in the third quarter at its quickest pace this year, and as the U.S. dollar weakened.
Gross domestic product in China, the world's second-largest oil consumer, grew 7.8 percent in the third quarter from a year ago, giving the market early support.
The dollar fell to an 8-1/2-month low against a basket of currencies as investors worried that the impact of the U.S. government shutdown could prevent the Federal Reserve from scaling back monetary stimulus.
"I think it's sinking back into the market that the Fed is probably not going to be changing its stimulus plan," said Gene McGillian, analyst with Tradition Energy in Stamford, Connecticut.
The Fed's stimulus measures have boosted commodity markets by weakening the U.S. currency, making oil and other commodities priced in dollars cheaper for holders of other currencies.
On Friday, Brent crude settled 83 cents higher at $109.94 a barrel. U.S. crude oil gained 14 cents and settled at $100.81 a barrel.
"The Chinese data gave us a bit of a bounce," said Phil Flynn, analyst at the Price Futures Group in Chicago, Illinois.
"We had some short-covering after a pretty good selloff yesterday," Flynn added.
For the week, Brent and U.S. oil settled 1.2 percent lower, after a sharp fall on Thursday that was fueled by signs of progress around talks between Tehran and the West over Iran's nuclear program.
The last-minute agreement in Washington on Thursday to fund the government and re-open federal agencies supported markets overall on Friday. Global stock markets climbed to a five-year high and the S&P 500 was on a record-breaking climb.
"The resolution to the debt ceiling has dried up some uncertainty and selling pressure and the market has stabilized," McGillian said.
Oil demand in the United States was up last month from a year earlier. U.S. oil demand rose 2.7 percent in September, due to the stronger economy and export demand, according to monthly data from the American Petroleum Institute. (Additional reporting Claire Milhench and Alexander Winning in London, Manash Goswami in Singapore; Editing by James Jukwey, Leslie Gevirtz, Carol Bishopric and David Gregorio)