Brent crude oil rose above $110 a barrel on Monday after stronger Chinese manufacturing data suggested China's economy may not be in as much danger as feared, supporting fuel consumption and outweighing fears over weak European data.

China's vast manufacturing sector picked up in October, snapping a three-month contraction and underscoring the resilience of the world's second-largest economy and top energy consumer, according to HSBC's China Flash Purchasing Managers' Index.

The PMI data, which rose to 51.1 in October from September's 49.9, soothed investor fears of an abrupt slowdown in China's economy that could send an already fragile world economy into recession.

The Chinese PMI number is better than expected and that is one of the main reasons for the rise, Christophe Barret of Credit Agricole said. Prices are volatile so the price could be corrected later in the day.

There is still much uncertainty around talks for a solution to the euro zone debt crisis and we are waiting for something more clear to emerge from the meetings, he added.

Strong Chinese data outweighed European growth fears as the European private sector tipped further into decline in October, according to business surveys on Monday that showed the bloc's economy is in serious danger of lurching from stagnation into outright recession.

Brent crude was up 72 cents at $110.28 a barrel by 1334 GMT, down from an intraday high at $110.94 a barrel.

Brent prices have risen by about 16 percent so far this year, and are heading for a third straight year of gains.

U.S. crude rose $1.04 to $88.44 a barrel, after reaching an intraday high of $88.65 a barrel.


Investors were also encouraged by signs that a summit of euro zone leaders on Wednesday could produce a solution to the euro zone debt crisis, although sharp differences remain over the size of losses private holders of Greek government bonds will have to accept.

It seems that despite recent prices the market seems to think that there is going to be some kind of agreement on the euro zone debt crisis, Roy Jordan of Facts Energy Global said. What we are seeing is that if the market is satisfied with the agreement then the price will have an upward spike.

European shares rose in early trade on Monday on optimism that policymakers were closer to an agreement on measures to tackle the euro zone sovereign debt crisis. .EU

By 1335 GMT, the FTSEurofirst 300 .FTEU3 index of top European shares was up 0.3 percent to 981.05 points, after rising 2.5 percent on Friday.

The Brent-WTI spreads were at $22.16, down from record high levels of $27.88 at the October 14 close.


North Sea Forties crude differentials rose on Friday from their lowest level in more than two months as demand increased.

Also in the North Sea, Statoil's (STL.OL) Grane oil and gas field is back to full production of some 150,000 barrels per day after technical problems reduced output to a fifth of its normal level for several weeks, the Norwegian firm said on Monday.

In Yemen, gunfire and shelling in the country's capital, Sanaa, killed two people on Sunday, medics said, two days after the United Nations issued a resolution condemning the violence and urging President Ali Abdullah Saleh to step down.

The post-Gaddafi era could put further downward pressure on oil prices as foreign companies repatriate staff to repair damaged oil fields securing the supply of Libyan crude to the international market, while some estimates say production could reach 600,000 bpd by the end of the year, according to a report from PVM Oil Associates.

(Additional reporting by Seng Li Peng in Singapore and Jane Lee in Kuala Lumpur; editing by Christopher Johnson and Jason Neely)