UPDATE 4-Oil hovers below $84 ahead of inventory data

                                
 * European equities fall, U.S. dollar firms
                                
 * European flights resume after volcanic ash disruption
                                
 * Coming Up: EIA inventories, 1430 GMT
                                
 
                                
 (Recasts, adds equities, dollar, updates prices)
                                
 By Joe Brock
                                
 LONDON, April 21 (Reuters) - Oil prices hovered below $84 a
barrel on Wednesday as weak equities and a stronger dollar
offset upbeat sentiment fuelled by a resumption of European air
travel, while investors awaited key U.S. government stocks data.
                                
 Oil inventory data from the Energy Information
Administration (EIA), due at 1430 GMT, will provide the latest
demand indication from the world's largest energy user.
                                
 U.S. June crude futures fell 5 cents to $83.80 a barrel at
1217 GMT, still $3 below an 18-month high reached on April 6.
ICE Brent for June <LCOc1> rose 48 cents to $85.28.
                                
 Oil erased earlier gains as European stock markets turned
lower and the U.S. dollar firmed against a basket of currencies
<.DXY>. A stronger dollar makes commodities more expensive for
those holding alternative currencies.
                                
 Flight bans related to an ash cloud caused by an Icelandic
volcanic eruption were lifted on Tuesday, alleviating concerns
some investors had over the impact the disruptions would have on
fuel demand. [ID:nLDE63J2L9] 
                                
 "The resumption of flights is certainly helping prices,"
said Tony Machacek, broker at Bache Commodities.
                                
 "But, people will be waiting for the DOEs (U.S. government
inventory data) for confirmation of what is really happening
with U.S. stocks."
                                
 
                                
 INVENTORY DATA
                                
 The EIA data due on Wednesday comes after numbers showing
unexpected drops in U.S fuel inventories last week and a
larger-than-forecast decline in crude inventories reported by
the industry-funded American Petroleum Institute on Tuesday.
[ID:nN20130519] 
                                
 The front-month U.S. crude contract <CLc1> has rebounded
almost 5 percent from a low of $80.53 two days ago, helped by
Tuesday's expiration of the May contract. Crude is now trading
in the middle of a new $80-$87 range.
                                
                          
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^     For a graphic on recent U.S. crude oil highs and lows, click
here:
http://graphics.thomsonreuters.com/gfx/ACO_20102104085023.jpg
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>    Last week and on Monday, oil prices retreated after legal
action was taken against Goldman Sachs <GS.N>, hitting the
appetite for riskier investments but upbeat corporate results on
Tuesday helped to encourage investors back for assets such as
oil.
                                
 Morgan Stanley <MS.N> beat expectations with its
first-quarter results, sending its stock up by over 4 percent in
pre-market trade. [ID:nN20196867]
                                
 Traders were also looking at data out of China, which shows
diesel exports in March rose to the highest this year, while
gasoline exports rebounded to levels similar to January as oil
firms draw down their brimming fuel stockpiles after months of
hefty production. [ID:nTOE63K04N]
                                
 China is under pressure to boost the value of its currency
because trading partners including the United States. say it is
undervalued. A stronger yuan would mean larger oil imports by
the world's second-biggest oil consumer. 
 (Additional reporting by Alejandro Barbajosa; editing by Amanda
Cooper)