* 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 prices, detail, comment)
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 0923 GMT, U.S. crude for October delivery <CLc1> was up
46 cents at $70.42 a barrel. London Brent crude rose 69 cents to
$70.34 a barrel.
China and Hong Kong share markets steadied on Tuesday,
staying range-bound after a rout on Monday, as positive
manufacturing data put the spotlight on the mainland's still
robust economic recovery story. [] []
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. []
HOPE
"The Chinese industry data supplied a bit of hope," said
Eugen Weinberg, analyst at Commerzbank.
"I don't see a strong recovery in the oil price, just a
small rise. It's an attempt to reverse the massive price drop.
But the risk factors ... freight rates, a weak stock market,
possibly also a stronger dollar and weak equity markets in
Europe today indicate prices are likely to fall."
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
above 50 indicating the sector is expanding for the first time
since the recession began, a Reuters poll of economists showed.
Weekly oil inventory data from the American Petroleum
Institute (API) is due at 2030 GMT. U.S. crude stocks likely
fell 400,000 barrels last week, helped by a 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 it meets 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 Catherine Bosley in London and
Jennifer Tan in Singapore; editing by Keiron Henderson)
