* Weakening sterling halts rally
* Euro stable vs dollar on prospect of aid for Greece
* Traders focus on key U.S. jobs data this week
(Updates prices, adds comment)
LONDON, March 1 (Reuters) - Oil trimmed early gains
to trade below $80 a barrel on Monday, pressured by a fall in
sterling to its lowest in nine months against the dollar on
worries over political uncertainty.
U.S. crude for April delivery <CLc1> fell 11 cents to $79.57
by 1224 GMT, after having climbed by as much as 96 cents. On
Friday, the contract settled up $1.49 at $79.66 and posted its
biggest monthly percentage gain since May 2009.
London Brent crude <LCOc1> rose 1 cent to $77.60.
"We're seeing the pound get absolutely hammered, and it has
taken the shine off the oil market," said David Morrison, market
strategist at GFT Global in London.
Sterling shed well over one percent against the dollar and
the euro after a poll showed a growing risk that no party will
win a majority in an election due by June
3.[][]
The British currency was on track for its largest one-day
fall against the dollar since February 2009, while gold priced
in sterling <XAUGBP=R> hit record highs.
"Because these markets are all so correlated ... they have
all become traders' markets, and not investors' markets, and
it's always with an eye on the dollar," Morrison said.
The dollar rose by almost 1 percent against a basket of
major currencies. <.DXY>
COPPER COMMODITY
Oil rallied earlier on a combination of bullish sentiment
and a rise in the price of copper futures following a massive
earthquake on Saturday in Chile, the top producer of the
industrially indispensable metal.[]
Chile's state energy company ENAP said it was boosting
diesel imports after two of its oil refineries -- Aconcagua and
Bio Bio with a combined capacity of 220,000 barrels, per day --
were damaged in Saturday's quake.
"Although these volumes are not large in a global context,
this disruption is just another to add to a series of oil supply
disruptions that have occurred recently, again, potentially
hastening the tightening in oil fundamentals that has already
begun," analysts at Goldman Sachs wrote in its Commodities
Update.
FOREX FOCUS
The euro fell against the dollar on Monday, paring earlier
gains made on the back of emerging signs that a support deal for
Greece may be near. Commodities priced in U.S. dollars tend to
become cheaper for holders of other currencies if the dollar
declines. []
Any progress towards an aid plan for Athens could boost the
euro, as well as bond prices and banking stocks in Greece and
other indebted countries on the euro zone's southern periphery.
But any rally by the euro might be brief, because investors
would also worry that a dangerous precedent was being set for
Germany and other rich states in the zone to take on the
liabilities of poorer ones.
IRANIAN EXPORTS
On Sunday a senior military official from Iran, the world's
fourth-largest exporter of crude, said the country could make
European nations suffer by cutting off energy supplies and could
target any adversary with its missiles.[]
Iran is disputing its nuclear energy programme with the
United States and its allies, who say it is aimed at developing
weapons. Tehran says it is only interested in power generation
and medical research.
Oil traders will look to economic reports this week, with
key focus on U.S. jobless data on Friday, that should give more
clues on consumer spending.
Other economic indicators due include U.S. manufacturing on
Monday and U.S. home loans on Wednesday.
Positive economic data on Friday from the United States,
which saw the world's largest economy grow faster in the fourth
quarter than initially thought, also helped increase investors'
appetite for more risky assets, lending further support to oil.
(Additional reporting by Fayen Wong in Perth, editing by Amanda
Cooper)
