* Euro slumps to 4-year low before recovering towards $1.20
* Oil down 18 percent since early May
* For a technical view, click: []
(Recasts, adds details, previous dateline PERTH)
By David Sheppard
LONDON, June 7 (Reuters) - Oil reversed early losses of
almost 3 percent on Monday after a dip below the psychological
$70 a barrel level brought out bargain hunters, despite signs of
weakness in the U.S. recovery and warnings on Hungary's debt.
Benchmark U.S. crude prices <CLc1> fell by as much as 2.8
percent, touching a low of $69.51 a barrel in Asian trade and
taking losses since Thursday to more than $5, before the market
rallied to trade down just 11 cents at $71.40 by 1113 GMT.
Prices have declined by almost one fifth since hitting a
19-month high above $87 a barrel in early May.
ICE Brent crude for July <LCOc1> rose 26 cents to $72.35.
Markets were roiled in Asian trading as investors rushed to
catch up with a late Friday sell-off on Wall Street following
disappointing U.S. employment figures and comments from senior
officials in Hungary's ruling party suggesting the country was
heading for a Greek-style debt crisis.
"Asia was weak overnight with both stock and metal markets
getting hammered," said Sucden Financial trader Rob Montefusco.
"It's recovered quite well as the euro's firmed off its lows
-- oil is mainly trading off the broader economic sentiment for
the moment."
The euro <EUR=>, which has turned into the barometer for
investor risk appetite, fell below $1.19 to its lowest since
2006, before recovering to trade near $1.20. []
HUNGARY
Hungary's government said talk of a possible debt crisis was
"exaggerated" on Saturday, but fears have been rekindled that
more European nations could reveal financial frailties.
[]
"There are lingering concerns about the European fiscal
problems and also of course the weak U.S. jobs numbers on Friday
also added to the gloom," said Toby Hassall, chief commodities
analyst at CWA Global Markets Pty Ltd in Sydney.
"In addition to that, the strengthening U.S. dollar is also
adding pressure as well. It's a multitude of negative influences
out there that are currently pressuring oil prices."
A stronger dollar makes oil imports more expensive for
European buyers and for consumers in Asia where demand is
surging.
Equity markets in Europe also slipped on Monday, but a near
3 percent bounce in oil major BP's shares helped steady markets.
BP <BP.L> shares rose after the company said it was
capturing most of the oil gushing from its leaking Gulf of
Mexico well, and that an additional capture system would be
ready for mid June. []
Oil prices were also supported by the start of the Atlantic
hurricane season this week -- which the top U.S. government
weather agency has warned could be the most intense since 2005.
[]
"We suspect that improving U.S. demand and the advent of the
hurricane season should prevent protracted declines below $68
support from taking hold," MF Global analysts Edward Meir said.
(Additional reporting by Fayen Yong in Perth and Alejandro
Barbajosa in Singapore; Editing by William Hardy and Sue Thomas)
