(Corrects reference to dollar's impact on oil)
* China's Jan official PMI slips to six-month low
* Dollar index near a two-month high on healthy US data
* Iraqi army bombards Falluja in preparation for ground
* Syrian forces kill 83 in barrel bomb attacks in Aleppo
By Manash Goswami
SINGAPORE, Feb 3 Brent futures fell to a
two-week low on Monday at $106 a barrel as weak factory data
from China stoked demand growth worries, but fresh violence in
Iraq and Syria checked losses.
China's factory growth eased to an expected six-month low in
January, hurt by weaker local and foreign demand, and
heightening worries of a wide slowdown across emerging markets.
That weighed across most markets such as Asian shares and base
metals as investors found a new reason to sell high-risk assets.
Brent crude slipped 10 cents to $106.30 a barrel by
0359 GMT, extending losses after declining the most in a month
on Friday. It earlier touched $106, its lowest since Jan. 20.
U.S. oil dropped 40 cents to $97.09, after settling
74 cents lower and falling the most in a week.
"Brent is suffering from the emerging market turmoil that is
spreading across most markets," said Tetsu Emori, a commodity
fund manager at Astmax Investment. "But specific to Brent are
supply disruption fears from Syria, Iraq and others. That is
helping support prices."
Oil also weakened after breaking past a few key technical
support levels in the previous session, Emori said.
Both the contracts are poised to fall further in February as
prices usually weaken during the month, Emori said. Brent may
slip to as low as $103 a barrel and the U.S. benchmark to $92
during the month, he said.
"We could see prices touching the bottom for the year in
February," Emori said. "February will be an important month to
start buying for the year."
A strong dollar also kept a lid on oil prices by making it
expensive for holders of other currencies.
The dollar index held near a two-month high set late
last month following robust U.S. economic data that reinforced
views the world's biggest economy has weathered the emerging
markets turmoil. That would enable the Federal Reserve to keep
reducing its stimulus, which would boost the greenback further.
But geopolitical tensions and the possible impact on oil
supplies are expected to curb losses.
Investors are watching the unfolding unrest in Iraq. The
country's army intensified its shelling of Falluja on Sunday in
preparation for a ground assault to regain control of the city,
which has been under the control of militants for a month.
Sunni Muslim anti-government fighters, among them insurgents
linked to al Qaeda, overran Falluja in the western province of
Anbar on Jan. 1, against a backdrop of deteriorating security
across fast-growing oil exporter Iraq.
Crude exports from Iraq declined in January to an average of
2.23 million barrels per day (bpd) but should rise next month,
Oil Minister Abdul Kareem Luaibi said on Saturday.
Luaibi attributed the drop from 2.34 million bpd in December
to attacks on the pipeline carrying oil from the northern Kirkuk
oilfields to Turkey, as well as disruption to shipping from
Iraq's southern ports due to bad weather.
In Syria, military helicopters dropped more improvised
"barrel bombs" on the northern city of Aleppo, a monitoring
group said, bringing the death toll to at least 83 people in the
latest episode of a campaign that many consider a war crime.
The nation is not key in terms of oil shipments, but markets
have been worried about the crisis in the country spilling
across the Middle East and engulfing major exporters.
(Reporting by Manash Goswami; Editing by Tom Hogue)