UPDATE 12-Oil drops $6 to below $88 on demand concerns

                                
 * Credit crisis fallout seen hitting oil demand
                                
 * Concerns contagion could spread to Chinese consumption
                                
 * Global stocks markets tumble
                                
 * Price drop worries come OPEC members
 (Updates prices)
                                
 NEW YORK, Oct 6 (Reuters) - Oil dropped $6 to below $88 a
barrel on Monday on expectations the growing financial crisis
will further slow already faltering global fuel demand.
                                
 U.S. crude <CLc1> traded down $6.00, to $87.80 a barrel, at
2:30 p.m. EDT (1830 GMT) after hitting a fresh eight-month low
of $87.56. London Brent crude <LCOc1> fell $6.45 to $83.80 a
barrel.
                                
 Crude prices have plummeted from a peak over $147 a barrel
set on July 11 as high fuel prices and the growing financial
crisis slow oil demand in top consumer the United States and
other industrialized nations.
                                
 "The prevailing macro sentiment is now crystallizing around
the notion that we are heading into a synchronized global
slowdown, a mirror image of the across-the-board expansion we
saw from 2004 to early 2007," said Edward Meir of broker MF
Global.
                                
  Analysts are now eyeing demand from China -- which helped
fuel a 6-year rally in commodities -- for signs the crisis is
hitting consumption.
                                
 The world's second biggest consumer will not import
gasoline for the second straight month and instead export the
fuel due to heavy domestic stockpiles and a dip in demand.
[ID:nSP7350]
                                
 "I think the market's starting to build this into prices,"
said Mark Pervan, senior commodities analyst at ANZ. "You would
expect the market is now joining the dots and thinking ... this
will probably flow through to China."
                                
 The U.S. and European governments are trying to underpin
the financial sector but this has so far failed to reassure
investors.
                                
 U.S. stocks fell on Monday, with the Dow diving 689 points
and falling below 10,000 for the first time in four years, as
part of a global sell-off on investor fears the widening
fallout from the credit crisis would drag the economy into
recession. [ID:nN06161659]
                                
 European shares suffered their worst one-day percentage
fall on record, sinking to four-year closing lows while trading
in Brazil halted after a 15 percent drop in its benchmark
index. [ID:nL6511744]
                                
 The drop in prices has caused some concern among OPEC
members.
                                
 "Definitely there is worry. When the prices are so
volatile, like rising to $140 and then dropping to below $90,
it worries everybody," said Iraq's Oil Minister Hussain
al-Shahristani. [ID:nL6483619]
                                
 Ecuadorean Oil Minister Galo Chiriboga said on Monday that
OPEC will analyze the impact of the global financial crisis on
oil demand and set production levels in accordance.
                                
 Iran said $100 a barrel was too low and urged members to
respect their output targets to prevent oversupply from
worsening. [ID:nL4649845]
                                
 OPEC President Chakib Khelil said OPEC would seek to
balance the market when it meets in December.[ID:nL570862]
 (Reporting by Matthew Robinson, Gene Ramos and Robert Gibbons
in New York, Jane Merriman and Joe Brock in London and Jonathan
Leff in Singapore; Editing by Christian Wiessner)