* Tropical depression forming in mid-Atlantic -NHC
* Asian, European equities rise despite slower China growth
* Coming Up: U.S. manufacturing PMI; 1400 GMT
(Updates throughout)
By Joe Brock
LONDON, Aug. 2 (Reuters) - Oil rose towards a 12-week high
above $79 on Monday, driven by a surge in risk appetite as
robust corporate results spurred an equities market rally.
European stock markets followed Asian equities higher as
investors focused their attention on the company earnings season
after results from French bank BNP Paribas <BNPP.PA> beat
expectations. []
U.S. September crude <CLc1> rose 48 cents to $79.43 a barrel
by 0806 GMT, having reached a 12-week high of $79.69 last week
and climbed 4.35 percent last month. ICE Brent <LCOc1> gained 47
cents to $78.65.
Despite Monday's gains, crude futures were underperforming
equity markets and analysts warned that the latest rally may be
short-lived if investors focus on the weak fundamental outlook
following lacklustre economic data.
"I don't see a reason for anymore significant rise in oil
prices and today's gains could easily be wiped out," said
Christophe Barret, oil analyst at Credit Agricole.
"Fundamentals have not improved when you look at Chinese and
U.S. economic indicators they look pretty weak," Barret added.
China's official purchasing managers' index (PMI) fell to a
17-month low in July of 51.2 from 52.1 in June, the China
Federation of Logistics and Purchasing (CFLP) said on Sunday.
The PMI is designed to provide a timely snapshot of business
conditions and a figure above 50 indicates expansion.
[]
On Monday, an index based on a nationwide survey of business
executives conducted for HSBC showed Chinese manufacturing
shrank in July for the first time since the global downturn in
March 2009 on government steps to slow bank lending and fight
property speculation. []
SLOW GROWTH
Meanwhile, data on Friday showed that U.S. gross domestic
product expanded at a 2.4 percent annual rate, missing
expectations for growth of 2.5 percent, after an upwardly
revised 3.7 percent growth pace in the first quarter.
Despite an uncertain outlook for energy demand many were
still betting on further oil price gains.
Money managers increased net long crude oil positions, bets
that prices would rise, to the highest level since May on the
New York Mercantile Exchange in the week to July 27, the
Commodity Futures Trading Commission said on Friday.
"Long positions are starting to creep back into the market,"
said Ben Westmore, a commodities analyst at National Australia
Bank in Melbourne.
"It's a gradual process of regaining confidence that there
is not going to be a default soon," he added, in a reference to
the euro zone's debt crisis.
For a graphic on crude net long positions:
http://graphics.thomsonreuters.com/10/CFTC_Crude300710.gif
A tropical cyclone forming in the mid-Atlantic also lent
support to oil prices as the hurricane season enters what in
recent years has been a period of peak activity between August
and early October. Atlantic storms sometimes enter the Gulf of
Mexico, posing a threat to U.S. and Mexican oil infrastructure.
The U.S. National Hurricane Center (NHC) said late on Sunday
that a tropical depression may be forming in the mid-Atlantic,
assigning a 90 percent likelihood that the system may become a
tropical depression within the next day or so.
Attention this week will remain on U.S. economic data, with
the Institute for Supply Management manufacturing index expected
later on Monday, followed by July payrolls on Friday.
(Additional reporting by Alejandro Barbajosa in Singapore;
editing by sue Thomas)
