* China equities fall on rate hike talk, weighs on oil
* IEA trims 2011 oil demand growth estimate, raises 2010
* Coming Up: US retail sales, business inventories Monday
(Recasts, updates with settlement prices and market activity)
By Robert Gibbons
NEW YORK, Nov 12 (Reuters) - Oil prices slumped more than 3
percent on Friday, retreating from a 25-month high, amid a
broad commodities rout on fears that China may raise interest
rates to brake its economy and concerns about euro zone debt.
Profit-taking struck the market as traders said oil's near
8 percent gain over the past two weeks may have gotten ahead of
fundamentals, despite news this week of record Chinese demand
in October and big declines in U.S. crude and fuel stocks.
Friday's pull-back followed the biggest drop in the
Shanghai composite index <> in more than a year on the
talk of Chinese interest rate increases, after inflation sped
to a 25-month high in October and bank lending roared past
expectations. Earlier, China raised bank reserve requirements.
U.S. crude for December delivery <CLc1> fell $2.93, or 3.34
percent, to $84.88 a barrel, slipping to $84.52 intraday.
Prices fell 2.27 percent on the week, after last week's 6.6
percent surge.
Total volume topped 771,000 lots with less than an hour
left in electronic trading on Friday, above Thursday's 746,068
and 11.5 percent above the 30-day average.
"I think the $3 drop today was more than corrective. It
feels like the hype of higher prices, which began Nov. 1st, hit
the brick wall hard today," Michael Korn, a Princeton, New
Jersey-based options broker, said, referring to Saudi Arabia's
Nov. 1 indication that $90 oil would be tolerated.
[] "I think today was about longs getting out."
In London, ICE December Brent crude <LCOc1> fell $2.47 to
settle at $86.34 ahead of Monday's contract expiration.
"Today's sharp price plunge was mainly driven by issues
that focused primarily on concerns over Chinese monetary
tightening, European sovereign debt issues, mainly related to
Ireland, and disappointment regarding the G20 talks," Jim
Ritterbusch, president at Ritterbusch & Associates in Galena,
Illinois, said in a note.
The International Energy Agency, an adviser to 28
industrial countries, predicted on Friday the rate of oil
demand growth will slow in 2011, while raising its 2010
forecast, providing no comfort to traders looking for a more
sustained global demand recovery. []
"When you look at the fundamentals, although improving
during the week, they are not really supporting a very strong
increase in oil prices as we have had," said Christophe Barret
of Credit Agricole.
Oil vacillated, tracking the euro much of the day,
deepening losses as the dollar bounced when greenback buying
was sparked by an uptick in Treasury yields. []
Prices of U.S. Treasuries fell on Friday as the first day
of heavy purchasing by the Federal Reserve failed to jump-start
wider demand for low-yielding government debt. []
While euro zone debt concerns had been overshadowed by news
from China and signs of improving fundamentals, commodity
markets appeared to pay more heed on Friday.
Other commodity markets also plunged from multi-year highs,
with Ireland's debt woes and this week's spate of
exchange-imposed higher margin requirements adding to
investors' growing risk aversion.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
For a timeline on the eurozone crisis:
http://link.reuters.com/kar27p
Euro zone struggles with debt graphic:
http://r.reuters.com/hyb65p
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
Amid heightened concerns about Ireland, a Group of 20
leaders' summit in Seoul had not attained a breakthrough on
resolving global economic imbalances amid incongruent policies.
[]
(Additional reporting by Gene Ramos and Jeffrey Kerr in New
York, Alex Lawler in London and Alejandro Barbajosa in
Singapore; Editing by Walter Bagley)
