Oil prices fell more than $2 per barrel on Tuesday as the outlook for global growth darkened with renewed crisis in the euro zone and data suggesting economic activity in key economies was slowing more quickly than expected.

The dollar rose 1.5 percent while the euro fell sharply after a shock announcement that Greece would hold a referendum on its debt bailout, throwing efforts to resolve the euro zone's debt crisis into fresh doubt. 

Investors fear the Greek move will undermine Europe's efforts to stop its sovereign debt woes from spreading and could put other euro zone economies in jeopardy.

Bank runs, disorderly default and a Greek exit from the euro no longer look like wild scenarios, analysts say.

The bankruptcy of brokerage MF Global following bad bets on euro zone debt also deepened the gloom. It is the biggest U.S. casualty so far of Europe's debt crisis and the seventh-largest U.S. bankruptcy by assets.

ICE Brent December crude futures fell $2.11 to a low of $107.45 before recovering to trade around $107.85 by 1140 GMT. Brent posted a 6.6 percent gain in October, its biggest jump since April, and after slumping 10.5 percent in September.

U.S. December crude futures fell $2.78 per barrel to a low of $90.41 before rallying a little to around $90.70 by 1140 GMT. U.S. crude surged 17.7 percent in October, the biggest percentage gain since May 2009.

Risk aversion is back in the markets, said Eugen Weinberg, head of commodities research at Commerzbank in Frankfurt. The euro zone debt crisis is still the prevailing topic, and the solution we thought we were celebrating last week no longer seems certain.

PMIS

Prospects for global growth were dampened by data from China showing the country's big manufacturers ran at their slowest pace in October since 2009 as the official purchasing managers' index (PMI) fell to 50.4 in October from 51.2 in September.

Britain's economy is teetering on the brink of recession despite a solid performance in the third quarter, increasing pressure on the government to boost growth as fresh turmoil in the euro zone creates new risks.

The UK Purchasing Managers' Index (PMI) survey showed manufacturing activity in October fell at its sharpest monthly rate since June 2009 when Britain was still in recession.

Oliver Jakob, managing director of energy consultancy Petromatrix in Zug, Switzerland said the surprise news of the Greek referendum and the lower Chinese PMI data had cast a shadow over all financial markets.

Reports the collapse of MF Global may have been due to misuse of funds were also sending shivers through markets.

The New York Times reported federal regulators had discovered hundreds of millions of dollars in customer money had gone missing from MF Global. Regulators were looking into whether the broker used some of the money to support its own trades, it reported, citing unnamed sources.

Speculation about funds going missing in MF Global segregated accounts will not help, Jakob said. The mess in Greece will also not be helped by the liquidity issues resulting from the mess in MF Global, he added.

Investors were looking ahead to this week's meeting of the U.S. Federal Reserve, which ends on Wednesday, as well as a summit of the Group of 20 nations, and U.S. payroll data on Friday as pointers for the markets.

OPEC oil output fell in October as reduced supplies from Iraq, Nigeria, Saudi Arabia and Angola offset rising Libyan supply, according to a Reuters survey.

The International Energy Agency does not want OPEC to cut output at its December meeting because the IEA expects demand for OPEC oil will grow by half a million barrels per day in 2012 above the group's September output.

U.S. commercial crude oil stocks are forecast to have risen for the second consecutive time last week as imports continued to rebound, a preliminary Reuters poll of analysts found on Monday.

The industry group American Petroleum Institute's inventory report is due on Tuesday at 2030 GMT, with the U.S. Energy Information Administration's report following on Wednesday.