UPDATE 10-Oil rises 2 pct on Mideast fears, eyes Japan

                                
 * Oil pares gains amid fears of Japan nuclear disaster
                                
 * Violent clashes in Bahrain, Yemen, Syria support prices
                                
 * U.S. gasoline futures jump nearly 3 pct after EIA data
                                
 * Coming Up: U.S. jobless claims, 8:30 a.m. EDT Thursday
                                
 (Recasts, updates with market activity, prices, details)
                                
 NEW YORK, March 16 (Reuters) - Oil prices rose 2 percent
from near three-week lows on Wednesday as a crackdown on
protesters in Bahrain reignited worries unrest in the Middle
East could further hit oil supplies.
                                
 Concerns about the unrest in Bahrain -- where troops from
OPEC kingpin Saudi Arabia have intervened -- as well as
intensifying clashes in the streets of Yemen, Syria and
Algeria, overpowered a wave of risk aversion caused by the
Japan nuclear crisis that hit stock markets. [ID:nLDE72F0ZN]
[ID:nLDE72F12M] [ID:nLDE72F1SI]
                                
 "The increasing unrest in Bahrain -- and the interest taken
by Saudi Arabia in trying to resolve it -- must not be
overlooked as a risk driver," said J.P. Morgan analyst Lawrence
Eagles in New York.
                                
 Brent for April <LCOc1> settled at $110.62, up $2.10,
rebounding from its sharpest tumble in 13 months on Tuesday to
$107.35, the lowest since Feb. 23.
                                
 U.S. crude <CLc1> settled at $97.98 a barrel, up 80 cents,
after, having crawled from an early low of $96.22, the lowest
since Feb. 25.
                                
 Trading was volatile, selling off early peaks as Japan
struggled to avert disaster, with risk aversion sending some
players to the sidelines and volumes for both Brent and U.S.
crude below the 30-day average. U.S. stocks slumped 2 percent
and the Nasdaq composite index turned negative for the year.
[.N]
                                
 "Things are pulling back as equities turn negative and
people are liquidating and putting money on the sidelines until
they figure out what is going to happen in Japan," said Richard
Ilczyszyn, senior market strategist at Lind-Waldock in Chicago.
                                
 In Japan, operators of a quake-crippled Daiichi nuclear
plant said they would try again on Thursday to use military
helicopters to douse overheating reactors and avert disaster
after an earlier attempt was abandoned because of high
radiation. [ID:nL3E7EG2W2].
                                
 GASOLINE SUPPORT
                                
 Gasoline futures jumped nearly 3 percent in morning U.S.
trade after weekly data from the U.S. Energy Information
Administration showed a steep 4.17 million barrel draw in
stockpiles last week as companies reduced inventories of winter
grade fuel ahead of the switch to summer blends. [EIA/S]
                                
 U.S. crude rose even though weekly inventory data showed a
larger than expected inventory increase last week. [EIA/S]
                                
 Near midday, oil pared gains after EU Energy Commissioner
Guenther Oettinger warned that Japan's nuclear site could face
a further catastrophe in the coming hours. Oettinger's
spokeswoman later clarified his position, saying his comments
were based on his personal fears, which pulled up prices again.
[ID:nLDE72F24G]
                                
 MIDEAST UNREST
                                
 Sparking more worries about Middle East unrest, Iranian
President Mahmoud Ahmadinejad was quoted by state television
condemning Bahrain's crackdown on mainly Shi'ite protesters as
unjustifiable. [ID:nLDE72F1AZ]
                                
 In Libya, Muammar Gaddafi's forces have reclaimed several
several ports and oil installations in the country's eastern
section and was nearing the rebel-held city of Benghazi.
                                
 With more than a million barrels per day out of its 1.6
million bpd oil output estimated to have been shut due to the
insurgency, the latest pro-Gaddafi advances caused traders to
weigh whether Libya could restore full production soon or if
outages would persist in the long term.
                                
 In addition, traders eyed news that the United States,
France and Britain had urged the U.N. Security Council to take
speedy action on a proposed no-fly zone over OPEC member Libya,
as Washington suggested it might have decided to back the plan.
[ID:nN16155287]
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SNAP ANALYSIS-Japan nuclear crisis         [ID:nL3E7EF03A]
Economists' estimate of Japan quake impact [ID:nTOE72E01C] 
Charting Japan nuclear crisis: http://r.reuters.com/sec58r 
Picture, graphic packages:     http://r.reuters.com/wyb58r 
Refinery, utilities and smelter shutdowns  [ID:nL3E7EE1HQ] 
Insider video:                 http://r.reuters.com/mym58r 
LIVE:   http://live.reuters.com/uk/Event/Japan_earthquake2 
Libya oil production, exports problems     [ID:nLDE72F22G]
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 (Reporting by Gene Ramos, Robert Gibbons and Matthew Robinson
in New York; Jessica Donati in London; Alejandro Barbajosa in
Singapore; Editing by Marguerita Choy)