UPDATE 2-Oil rebounds from 3-week low towards $73

                                
   * Oil fell 8.5 pct last week, biggest weekly drop in eight
                                
 * For technicals showing oil at $70, click: [ID:nSGE66400O]
                                
 * Coming Up: Euro zone final services PMI June; 0758 GMT
 (Updates prices)
                                
 By Alejandro Barbajosa
                                
 SINGAPORE, July 5 (Reuters) - Oil snapped five days of
losses, rebounding 0.7 percent on Monday, on hopes that
downside risks have been priced into the market, creating an
opportunity to buy crude at near its lowest in three weeks.
                                
 Rising stock markets in Asia prompted participants to cover
short positions in a trading session where volumes were
expected to be thin because of the U.S. Independence Day
holiday.
                                
 "Market participants are thinking that around $70, prices
are quite cheap," said Tetsu Emori, a fund manager at
Tokyo-based Astmax Co Ltd.
                                
 U.S. crude for August climbed as much as 56 cents to $72.70
a barrel and was up 48 cents at $72.62 by 0643 GMT. The New
York Mercantile Exchange (NYMEX) will combine Monday's and
Tuesday's trading sessions because of the holiday, with a
single settlement price on July 6.
                                
 ICE Brent crude for August <LCOc1> rose 50 cents to $72.15.
                                
 Prices fell every day last week for a cumulative decline of
8.5 percent, the steepest weekly drop since early May. They
touched $71.62, the lowest intraday level since June 8, after a
report showing a larger-than-expected drop in U.S. nonfarm
payrolls for June of 125,000.
                                
 "The downside has already been priced into the oil market
and into stocks," Emori said. "The important thing now is what
kind of sentiment will emerge in the market and how investors
could be holding positions against the negative market
conditions."
                                
 Asian stocks edged up on Monday, with investors taking
profits on defensive plays and buying back beaten down shares,
though selling could resume as the U.S. and Chinese economies
are slowing in tandem. [MKTS/GLOB]
                                
 The dollar and U.S. equities fell on Friday after the weak
U.S. jobs report rekindled doubts about the strength of
recovery, yet failed to confirm widespread fears the economy
was dipping back into recession. [ID:nN01165161]
                                
 A weather system located between Jamaica and Honduras in
the Caribbean Sea had a 30 percent chance of developing over
the next two days into a tropical cyclone, a category that
includes tropical storms and hurricanes, the U.S. National
Hurricane Center said late on Sunday.
                                
 The system's location and expected course are similar to
those that Hurricane Alex followed during its formation stage
in late June, before moving into the Gulf of Mexico, forcing
Mexican oil terminals to shut down and U.S. producers to curb
output.
                                
 Gulf of Mexico oil operations continued to restart on
Friday after being shut as a precaution before Hurricane Alex
hit Mexico last week. [ID:nN01117871]
                                
 Money managers cut net long crude oil positions on the New
York Mercantile Exchange in the week through Tuesday, reducing
bets that prices will rise, the Commodity Futures Trading
Commission said on Friday. [ID:nN02240600]
                                
 Open interest positions remained bulked at August crude oil
$70 and $65 put options on Friday, an indication that traders
are betting prices will fall towards those levels.
[ID:nN02629491]
 (Editing by Clarence Fernandez)