By Lin Noueihed
LONDON (Reuters) - Oil slipped below $108 a barrel on Monday as an unexpected fall in China's exports stoked fears of a slowdown in the world's No. 2 economy, though geopolitical tensions in Ukraine and Libya limited the decline.
The drop in exports increased concerns over growth in oil demand as it followed a series of disappointing factory surveys since the start of 2014. Price gains in recent weeks on tensions in Ukraine mean oil is seeing a steeper correction.
Most risk assets, including Asian shares and base metals, also fell due to the weak numbers.
After two straight days of gains, Brent crude was trading $1.05 down at $107.95 by 1400 GMT, having fallen $1.25 earlier in the session. U.S. oil fell $1.42 to $101.16 a barrel after touching a high of $102.82.
"We've seen some disappointing data from China ... But I think people get a bit over-pessimistic about these numbers when the overall picture is still quite good. The falls will be limited," said Christopher Bellew, trader at Jefferies Bache.
"There has been no sign of deterioration in Ukraine. At the end of last week there was a rally that priced in an unexpected event at the weekend and that hasn't happened."
MARKET OUTLOOK
Russian forces consolidated their hold on Ukraine's Crimea peninsula on Monday, taking over a military hospital and a missile base as officials geared up for a referendum on the region's future.
Gazprom
"We will continue to see some back and forth between Russia and the West over Ukraine," said Victor Shum, vice-president of energy consultancy IHS Energy Insight. "The ongoing situation in Ukraine will put a high floor on oil prices and lead to more volatility."
Hedge funds and other large speculators last week raised their bets on a rise in Brent to the highest level since October, the IntercontinentalExchange (ICE) said, highlighting the effect of Ukraine tensions on sentiment.
Money managers increased their crude net long positions by 6,864 contracts to 146,785 in the week to March 4.
Oil is also being supported by a crisis in Libya. Libya threatened to bomb a North Korean-flagged tanker if it tried to ship oil from a rebel-controlled port, in a major standoff. Rebels said they were moving land and sea forces to confront any government attack.
At the same time, Libya's National Oil Company said production had restarted at the El Sharara field which feeds export terminals in the west and would reach capacity on Tuesday afternoon.
Combined Chinese exports in January and February fell 1.6 percent from the same period a year earlier. That raised concerns that the data was not weak due to distortions caused by the Lunar New Year holiday, which began on January 31 and covered early February.
Prices were under pressure even though China's crude oil imports in the first two months of the year rose 11.5 percent from a year earlier, as investors saw the rise partly as a result of a build-up in commercial crude inventories.
(Additional reporting by Manash Goswami in Singapore; Editing by Dale Hudson, Pravin Char and David Evans)
