* Oil recovers a little after biggest drop in over two weeks
* Weekly API data expected to show fall in U.S. crude stocks
* China PMI up; U.S. manufacturing index seen rising
* OPEC meet next week likely to keep supply targets steady
(Updates throughout, changes dateline, pvs SINGAPORE)
By Christopher Johnson
LONDON, Sept 1 (Reuters) - Oil climbed back above $70 a
barrel on Tuesday as stock markets rallied and manufacturing
sector data suggested China's economic recovery was on track.
Oil prices fell almost 4 percent on Monday, their biggest
drop in more than two weeks, in line with stocks on worries that
the Chinese government was tightening bank lending to moderate
growth and curb speculation. []
Traders said they were looking ahead to the release of a key
gauge of U.S. manufacturing activity in August and weekly crude
inventory data later on Tuesday, both of which were expected to
show a rebound in the U.S. economy and oil consumption.
By 0715 GMT, U.S. crude for October delivery <CLc1> was up
42 cents at $70.38 a barrel. London Brent crude rose 45 cents to
$70.10 a barrel.
The benchmark Shanghai stocks index <> rose more than 2
percent on Tuesday, led by financial and property shares on a
technical rebound after losing 6.74 percent on Monday, after
positive manufacturing data. []
China's official purchasing managers' index (PMI) for August
inched up to 54.0 from July's 53.3, a 16-month high. It was the
sixth straight month that the official PMI stood above 50,
indicating an expansion of activity in the manufacturing sector.
The PMI hit a record low of 38.8 in November. []
RECOVERY
Output and new orders both jumped, reinforcing expectations
of a solid Chinese economic recovery. []
In the United States, the Institute for Supply Management's
manufacturing gauge was due at 1400 GMT and expected to have
risen to 50.5 in August from 48.9 in July, which would bring it
into positive territory for the first time since the recession
began, a Reuters poll of economists showed.
Weekly oil inventory data from the American Petroleum
Institute (API), due at 2030 GMT, will also provide trading
cues. U.S. crude stocks likely fell 400,000 barrels last week,
helped by a slight rise in refinery utilisation, a preliminary
Reuters poll of analysts showed.
The U.S. Energy Information Administration (EIA) will
release its own data on Wednesday.
Traders said U.S. light crude oil futures, also known as
WTI, appeared to be fairly comfortable within a range between
$68 and $75 per barrel and taking short-term direction from U.S.
oil inventory figures and economic data.
"Despite the sell-off, WTI's trading range remains intact,"
broker MF Global said in its daily note to clients.
On the supply front, the Organization of the Petroleum
Exporting Countries is likely to leave output targets unchanged
when they meet to consider oil output policy on Sept. 9 in
Vienna, several ministers and officials have said.
[]
Even though OPEC agreed to 4.2 million barrels per day of
supply curbs late last year, and has kept output targets steady
so far in 2009, actual production has been rising in recent
months, according to industry surveys.
(Additional reporting by Jennifer Tan in Singapore; editing by
Sue Thomas)
