UPDATE 2-Oil retreats towards $74 ahead of Fed meeting

                                
   * Front-month contract depressed due to expiry -traders
                                
 * Technicals show crude headed for $76.02 [ID:nSGE68K00I]
                                
 * Coming Up: U.S. API weekly oil stocks; 2030 GMT
 (Adds Chinese implied demand, updates prices)
                                
 By Alejandro Barbajosa
                                
 SINGAPORE, Sept 21 (Reuters) - Oil fell on Tuesday,
resuming last week's trend and erasing part of the previous
session's gain of 1.6 percent, on lingering worries about the
U.S. economy ahead of a Federal Reserve meeting later in the
day.
                                
 U.S. crude for October <CLc1> fell disproportionately to
contracts further out, ahead of its expiry later on Tuesday. It
lost 72 cents to $74.14 a barrel by 0635 GMT, while the
November contract shed 34 cents to $75.85.
                                
 Oil on Monday tracked a global rally in equities, but gains
came in thin trade ahead of the Fed meeting, with total
contracts changing hands on the New York Mercantile Exchange
(NYMEX) about 25 percent below the average volume over the last
30 days, according to Reuters data.
                                
 "The front month is heading to expiration date today, so
liquidation is pressuring the market," said Tetsu Emori, a fund
manager at Tokyo-based Astmax Co Ltd.
                                
 "The overall market is not very bad, reflected by the
second-month contract. Equity markets are coming back and the
sentiment of investors is getting better than before, heading
into the FOMC meeting today."
                                
 The U.S. Federal Reserve is expected to tread water at a
policy-setting meeting on Tuesday with a renewed promise to
keep its portfolio from shrinking but no new steps to ease
monetary policy. [ID:nSGE68J04M]
                                
 "Risk appetite is reappearing. I think the Fed's statement
will not be that negative," Emori said.
                                
 Japan's Nikkei average rose 0.6 percent on Tuesday, hitting
a seven-week intraday high, with resource-related shares such
as Mitsubishi Corp <8058.T> rising after oil, gold and other
commodities rose the previous day. The S&P 500 <.SPX> hit a
four-month high on Monday as Wall Street sought to extend a
three-week rally. [.T] [MKTX/GLOB]
                                
 REPRESENTATIVE BRENT
                                
 ICE Brent <LCOc1> for November dipped 23 cents to $79.09,
trading more than $3 higher than the equivalent contract for
U.S. crude. That premium had shrunk to less than $2 last week
on expectations Midwest markets would tighten after a leak
forced Enbridge to shut the biggest Canada-U.S. crude pipeline
for more than a week.
                                
 "We would argue that Brent currently better reflects the
situation in the global oil market, where consumption growth
remains fairly robust," Credit Suisse analyst Stefan Graber,
based in Singapore, said in a report.
                                
 China's apparent oil demand rose 8.2 percent in August over
a year earlier, rebounding from July when refineries scaled
back crude purchases and throughput from June peaks, Reuters
calculations from official data showed on Tuesday.
[ID:nTOE68K03F]
                                
 Still, the U.S. recovery is so soft that it risks creating
a "frustrated generation" of young people unable to find work
despite having heeded advice to stay in school, the secretary
general of the Organization for Economic Cooperation and
Development said on Monday. [ID:nN20188157]
                                
 And U.S. home-builder sentiment remained stuck at a 1-