* China manufacturing contracts at fastest in 3 years -PMIs
* Brent, U.S. crude retreat more than $3 after 3-day rally
* Coming up: API oil inventory data 2030 GMT
(New throughout, updates prices and market activity, new
byline, changes dateline from previous LONDON)
By Robert Gibbons
NEW YORK, Sept 1 (Reuters) - Oil prices tumbled 7 percent on
Tuesday and Brent futures fell back below $50 a barrel as weak
Chinese manufacturing data revived concerns about global demand
for petroleum.
China's official Purchasing Managers' Index (PMI) dropped to
49.7 in August from 50.0 in July, reinforcing fears about
slowing growth. Oil prices retreated after a three-day rally of
more than 20 percent. ID:nZZN3DJD00
"It was primarily the China fear factor," Carsten Fritsch at
Commerzbank (XETRA:CBKG) in Frankfurt told the Reuters Global Oil Forum.
In another sign of faltering economic activity, data showed
U.S. manufacturing sector growth slowed in August to its weakest
pace in more than two years. ID:nN9N10A02E ID:nL1N1170Z1
Brent crude LCOc1 was down $4.08 at $50.07 a barrel at
12:09 p.m. EDT (1609 GMT) having fallen as low as $49.72.
U.S. crude CLc1 was down $3.59 at $45.61, having slumped
as low as $45.22. Monday's gains were 8.8 percent.
The CBOE's crude oil volatility index .OVX rose by nearly
10 percent intraday on Tuesday, trading at its highest since
March. ID:nL1N117195
On Aug. 24, Brent fell to a 6-1/2-year low at $42.23
intraday as plunging Chinese equities markets battered global
markets.
On Monday, Brent climbed $4.10, or 8.2 percent, extending
its rally to a third day as oil prices recovered from their
lowest levels since the global financial crisis.
Monday's rally was fueled by U.S. Energy Information
Administration (EIA) data showing revised U.S. oil output peaked
at just above 9.6 million barrels per day (bpd) in April before
falling by more than 300,000 bpd over the following two months.
ID:nL9N10A035 ID:nL1N1160WY
"Even with the EIA revision, we're still producing over 9
million barrels per day, so I'm not convinced we've seen the
fundamental shift to justify the rally," said Gene McGillian,
senior analyst at Tradition Energy in Stamford, Connecticut.
Some traders on Monday said oil prices got a lift from a
commentary in the OPEC Bulletin publication suggesting the group
is more willing to talk to non-OPEC producers about curbing
output, even though it was broadly in line with previous
comments. ID:nL9N10A035
A weaker dollar index .DXY provided no support for oil on
Tuesday. The dollar's weakness often supports dollar-denominated
commodities because they are less expensive for consumers using
other currencies.
Investors awaited fresh snapshots of U.S. oil inventories
due from industry and government starting with the American
Petroleum Institute's report at 4:30 p.m. EDT (2030 GMT) on
Tuesday.
Crude oil and gasoline stocks were expected to have fallen
last week, according to Reuters survey of analysts. EIA/S