Oil price gains capped by Japanese growth data

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World oil prices firmed on Monday but gains were capped by news that the Japanese economy experienced a sharp slowdown in the second quarter of the year, fanning worries about weak energy demand.

New York's main contract, light sweet crude for delivery in September, added 33 cents to 75.72 dollars a barrel.

Brent North Sea crude for September delivery advanced 29 cents to 75.40 dollars a barrel approaching midday in London.

"The price of oil has recovered a little at the start of the week, after dropping as far as 75 dollars on Friday," said Commerzbank analyst Carsten Fritsch.

"Friendly equity markets on the whole in Asia and a slightly weaker US dollar are lending tailwind to oil prices.

"Gains should be limited, though. Japan, the world's third biggest oil consumer, has reported that economic growth in the second quarter was much lower than expected."

Japan's real gross domestic product (GDP) grew by an annualised 0.4 percent in the three months to June, down from a revised 4.4 percent in the previous three months, official data showed on Monday.

The GDP figure for the world's second-biggest economy dashed market expectations for 2.3-percent growth, according to analysts polled by Dow Jones Newswires.

Before the weekend, crude futures fell for the fourth consecutive day on Friday, amid stubborn concerns over the global economic recovery and despite upbeat growth data in Europe.

Jitters over the US and Chinese economies, which are the world's top two energy-consuming nations, are putting a dampener on oil prices, said Tony Nunan, a risk manager with Mitsubishi Corp in Tokyo.

"The United States and China slowing down has got the markets a little concerned," he told AFP.

He added that the outlook for both economies was "less bullish than before" and was counteracting strong European economic data.

Global financial markets were also rattled last week after both the Bank of England and the US Federal Reserve downgraded their economic growth outlooks.

A surprise rise in the new US weekly jobless benefit claims added to increasing gloom over the strength of the global recovery from recession.

Slowing growth in China, the Asian powerhouse which has kept the global economy above water in the past 18 months, contributed to the worries over the worldwide economic rebound.

© 2010 AFP

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