UPDATE 7-Oil falls more than $3 on Japan crisis

                                
 * Brent falls below $110/bbl for first time since Feb. 24
                                
 * Japan's Nikkei share average plunges as panic grips Tokyo
                                
 * Saudi troops enter Bahrain to help calm protests
                                
 * Coming up: US API weekly inventory data
                                
 
                                
 (Updates prices, analyst comment)
                                
 By Nia Williams
                                
 LONDON, March 15 (Reuters) - Brent crude fell below $110 a
barrel for the first time in nearly three weeks on Tuesday as a
deepening nuclear crisis in Japan and rising radioactivity
levels heightened risk aversion across financial markets.
                                
 There was panic buying in Tokyo after explosions at two
nuclear reactors sent a low-level radioactive wind towards the
capital, although officials said radiation levels at the
stricken Fukushima Daiichi nuclear complex had fallen after an
earlier spike.
                                
  April Brent <LCOc1> fell $2.81 to $110.86 a barrel at 1044
GMT after trading as low as $109.90. U.S. crude for April <CLc1>
dropped $2.62 to $98.57 after earlier slipping to $97.81.
                                
 "It's a combination of uncertainty and risk aversion," said
Commerzbank analyst Eugen Weinberg.
                                
 "It's not really fundamental concerns that Japan, one of the
largest oil consumers, will be missing over the next few months.
It's more sentiment that is depressing the prices of risk assets
such as equities and commodities." 
                                
 <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ 
 Japan's unfolding disaster:     http://r.reuters.com/mak58r 
 Japan graphics suite:           http://r.reuters.com/quh58r  
 How a meltdown can occur:       http://r.reuters.com/rah58r  
 Nuclear plants, quakes zones:   http://r.reuters.com/qah58r  
 LIVE COVERAGE 
 http://live.reuters.com/uk/Event/Japan_earthquake2
 Japan quake rips through commodities, energy:
 http://link.reuters.com/bum58r
                                
  ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
  
                                
 At one point, Japanese stocks plunged more than 14 percent,
heading for their biggest drop since 1987 as concerns grew over
the economic impact of the unfolding disaster [.T]
                                
 Oil demand from Japan, the world's third-largest user, is
likely to decline in the short term as manufacturing and
transport slow but could then rise as the country seeks to
replace nuclear with oil-fired power during reconstruction.
                                
 The International Energy Agency (IEA) said on Tuesday global
oil demand was likely to be lower than previously forecast in
2011 as a result of a price shock and trimmed its forecast by
10,000 barrels to 1.44 million barrels per day. [ID:nWLA5303]
 
                                
 SAUDI TROOPS IN BAHRAIN
                                
 Oil markets were also keeping a close eye on developments in
the Middle East, where Saudi Arabia sent troops into Bahrain on
Monday to help calm weeks of protests by the Shi'ite Muslim
majority. [ID:nLDE72E02N]
                                
 Opponents of Bahrain's Sunni ruling family called the move a
declaration of war, while Iran denounced it as unacceptable and
the United States urged its nationals to leave the island, which
is home to the U.S. Navy's Fifth Fleet.
                                
 "The oil market is eyeing both developments in the Middle
East and in Japan," said Harry Tchilinguirian, head of commodity
markets strategy at BNP Paribas.
                                
 "While the tensions in the Middle East represent upside risk
to oil prices, the disruption to activity in Japan, and
regionally through trading its trading ties with China, is
leading oil prices lower for now."
                                
 <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ 
  Reuters Global Oil Forum will host an interactive Q+A with IHS
Global Insight Middle East specialist Samuel Ciszuk from 1530
GMT (1130 EDT) on Tuesday to discuss the political outlook for
the oil market. To visit Reuters Global Oil Forum: 
                                
 rmchat://room/thomsreuters.com/Global_Oil_Forum 
                                
  ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
                                
 In Libya, Muammar Gaddafi's jets bombed rebels on Monday in
a counter-offensive that has pushed them back 100 miles (160 km)
in a week, far outpacing diplomatic efforts to impose a no-fly
zone to help the insurgents. [ID:nLDE72D26K]
                                
 On the data front, markets were looking towards weekly U.S.
inventory numbers from industry group American Petroleum
Institute. A Reuters poll indicated U.S. crude oil stockpiles
probably rose by 1.8 million barrels last week. [EIA/S]
 (Additional reporting by Alejandro Barbajosa and Ikuko
Kurahone, editing by Anthony Barker)