* Markets tumble on worries over health of financial sector
* U.S. government prepares another bailout for insurer AIG
* HSBC launches Britain's largest ever rights issue
* Iran says OPEC not expected to cut production
(Updates throughout, changes dateline, pvs PERTH)
By Christopher Johnson
LONDON, March 2 (Reuters) - Oil prices fell below $44 per
barrel on Monday on worries the deteriorating state of the world
economy would further damage oil consumption.
The U.S. government threw a new $30 billion lifeline to
American International Group <AIG.N> on Sunday as the insurer
prepared to report the biggest quarterly loss in corporate
history. AIG is expected later on Monday to report a
fourth-quarter loss of about $60 billion. []
In London, HSBC <HSBA.L> launched a $17.75 billion rights
issue -- Britain's largest ever -- to shore up its balance sheet
after profits fell and bad debts soared in the United States.
Stocks fell sharply in Europe and Asia. [] []
Comments from Iran, the second-biggest producer in the
Organization of the Petroleum Exporting Countries, that the
producer group was unlikely to cut production again at a meeting
this month, added further downward pressure on prices.
U.S. crude <CLc1> fell $1.65 to $43.11 by 0900 GMT. The
contract snapped a three-day rally on Friday to settle down 46
cents at $44.76.
London Brent crude <LCOc1> fell $1.55 to $44.80 a barrel.
"Economic pessimism and weak equities are dragging us lower
today," said Christopher Bellew, oil broker at Bache Commodities
in London. "The AIG bailout and HSBC rights issue are again
focusing attention on the fragility of the financial system."
CONFLICTING OPEC SIGNALS
Oil is being undermined by persistent worries about the U.S.
economy. Data on Friday showed it shrank by 6.2 percent in the
fourth quarter from a year ago, the deepest slide since 1982.
[]
Conflicting signals from some OPEC members on whether the
group would reduce output at its March 15 meeting encouraged the
sell-off.
Algerian Energy and Mines Minister Chakib Khelil said it was
quite possible that OPEC would cut oil output at its next
meeting scheduled for March 15. []
But Iran's oil minister, Gholamhossein Nozari, said he did
not expect OPEC to slash output again because an 80 percent
commitment by the group to recent curbs had helped stem price
falls, media reported on Sunday. []
Oil prices have plunged by more than $100 a barrel since a
peak of nearly $150 last July as demand has tumbled. To shore up
prices, OPEC has pledged to cut output by a total of 4.2 million
barrels per day (bpd) since September.
The U.S. Department of Energy said on Friday it hoped OPEC
would consider the "global economic situation" when it reviewed
its output policy in Vienna.
In a sign that investors were becoming more bearish, there
were more open interest positions at the $25 and $30 put options
on the NYMEX April crude oil contract compared with the previous
week, Reuters data showed on Friday. []
And crude oil investors on the New York Mercantile Exchange
cut net long positions in the week to Feb. 24, according to data
from the U.S. Commodity Futures Trading Commission.
[]
The market was awaiting key data on Monday, including U.S.
personal income and consumption and construction spending for
January as well as the U.S. February ISM manufacturing index.
(Reporting by Christopher Johnson; editing by Anthony Barker)
