Oil down 2nd day as stimulus hopes falter

* Investors focus on U.S., Euro central bank meetings

* China promises further economic support

* Coming up: EIA oil data 10:30 a.m. EDT Wednesday (Adds Brent settlement, Obama action on Iran, paragraphs 7, 20)

By Robert Gibbons

NEW YORK, July 31 (Reuters) – Oil prices fell for a second straight day on Tuesday on expectations that any central bank stimulus may be insufficient to revive economic growth, even as hopes dimmed that the U.S. Federal Reserve will act this week to boost the economy.

Supportive data from the United States, including higher home prices, improved consumer confidence and Midwest business activity was seen as lowering the chance of more stimulus from the Fed when its two-day policy meeting ends Wednesday.

“Oil prices are lower on the paradox of slightly better economic data in the form of the Chicago PMI and the consumer confidence reading,” said John Kilduff, a partner at Again Capital LLC in New York.

“The slightly positive readings may keep the Fed from acting as fully as the markets have priced in. Also, the comments from various German leaders have taken away some the expectations for ECB action,” Kilduff added.

Even with two days of losses, Brent crude ended July up 7.28 percent for the month, snapping a string of three monthly declines.

U.S. crude posted a 3.65 percent monthly gain, ending a two-month streak of declines.

Brent September crude fell $1.28 to settle at $104.92 a barrel.

U.S. September crude slumped $1.72 to settle at $88.06 a barrel.

Total crude trading volumes remained lackluster, with dealings for Brent and U.S. crude well below 30-day averages.

U.S. gasoline and heating oil futures also ended lower as the front-month August contracts’ expired.

Ahead of weekly reports on U.S. oil inventories, crude oil stocks are expected to have dipped and refined products stocks to have risen, a Reuters survey of analysts showed.

The report from the American Petroleum Institute is due at 4:30 p.m. EDT (2030 GMT) on Tuesday.

Slowing growth in the United States, the world’s top oil consumer, has fuelled expectations of stimulus measures from the Federal Reserve, which starts a two-day policy meeting on Tuesday, although caution about the likelihood the Fed will act immediately was evident as the meeting neared.

Last week’s statement by European Central Bank President Mario Draghi that the ECB would do whatever it takes within the bank’s mandate to protect the euro raised expectations of new policy measures to address the debt crisis when the ECB meets on Thursday.

Germany’s finance minister on Tuesday reiterated its view that there is no need to grant a banking license to the euro zone’s new bailout fund. Such a move could enable the fund to buy large amounts of debt issued by troubled euro zone economies.

Oil received support early after a pledge by leaders in China to increase fiscal and monetary support to the economy in the second half of the year.

MIDDLE EAST UNCERTAINTY

Investors remained concerned about tensions between the West and Iran over Tehran’s nuclear program and the violence in Syria, even as the global economy has the spotlight.

“For the moment, the economy remains the main focus for most investors; that isn’t to say that the situation in Iran and the Middle East isn’t of concern,” said Ric Spooner, chief market analyst at CMC Markets.

U.S. Secretary of Defense Leon Panetta denied media reports on Tuesday that he would discuss possible military attack plans against Iran during a brief visit to Israel.

President Barack Obama announced new U.S. sanctions against foreign banks that help Iran sell its oil, hoping to add pressure on Tehran a day before congressional votes on new sanctions.

Syrian combat aircraft and artillery pounded two areas of Aleppo as the army battled for control of the country’s biggest city, but rebel fighters said troops loyal to President Bashar al-Assad had been forced to retreat. (Additional reporting by Gene Ramos in New York, Peg Mackey in London and Luke Pachymuthu in Singapore; Editing by Bob Burgdorfer and Alden Bentley)

Source: http://sg.finance.yahoo.com/news/11-oil-down-2nd-day-200743872.html