UPDATE 7-Oil falls near 2 pct, U.S. job data weighs

                                
 * U.S. payrolls fell by 263,000 in September
                                
 * Iran nuclear concerns persist but impact seen limited
                                
 (Updates prices)
                                
 NEW YORK, Oct 2 (Reuters) - Oil fell nearly 2 percent
toward $69 a barrel on Friday after U.S. employment figures
raised doubts about the strength of the economic recovery.
                                
 U.S. unemployment in September rose to its highest rate
since June 1983, with payrolls dropping 263,000 against market
expectations of a 180,000 fall, the U.S. Labor Department said,
bringing unemployment to 9.8 percent. [ID:nN02313406]
                                
 "Compared to previous recessions, the pace of the current
recovery can only be characterized as glacial," said Mike
Fitzpatrick, vice president at MF Global in New York.
                                
 U.S. crude futures <CLc1> traded down $1.39 to $69.43 a
barrel by 1:38 p.m. EDT (1738 GMT).
                                
 London Brent crude <LCOc1> lost $1.60 to $67.59 a barrel.
                                
 Oil inventories have swelled as the recession hits global
fuel demand, sending crude prices from record highs close to
$150 a barrel in July 2008 to below $33 a barrel in December.
                                
 Traders have looked toward wider economic data for signs of
a turnaround that would send fuel consumption higher.
                                
 "At the moment, it's looking vulnerable as stocks of oil
are still very high and we're still not seeing a huge pick-up
in demand," said Sucden Financial trader Rob Montefusco.
                                
 Crude found some support as the jobs data pushed down the
dollar against major currencies. [USD/] A weaker greenback
tends to boost dollar-priced commodities, as they become more
cheaper in other currencies.
                                
 Oil markets were also watching talks between six major
powers and Iran -- the second largest oil exporter in the
Organization of the Petroleum Exporting Countries (OPEC) --
over Tehran's nuclear program.
                                
 Both the United States and Iran described Thursday's talks
as productive, after Iran agreed to allow U.N. inspectors into
a newly disclosed uranium enrichment plant. [ID:nLU404202]
                                
 While tensions between Iran and the West over the nuclear
program have supported prices at times in recent years, but
analysts said the current situation could quiet down again.
                                
 "While we certainly can't rule out more surprises in the
next three months, there is a good chance that Iran will fade
from the front pages, leaving the diplomatic and intelligence
services to quietly do their work in the background," said
Societe Generale analyst Michael Wittner.
 (Reporting by Edward McAllister, Matthew Robinson, Gene Ramos
and Robert Gibbons in New York; David Sheppard in London;
Ramthan Hussain in Singapore; Editing by Marguerita Choy)