December 5, 2011 / 4:34 AM / 8 years ago

UPDATE 8-Oil falls as euro slips, eyes downgrades report

* Euro dips vs dollar on report of S&P warnings

* U.S., China service sector activity slows, data shows

* Sarkozy and Merkel plan ‘wide-ranging’, doubts raised

* Iran tensions raise supply risks, but OPEC

* Coming Up: API U.S. stocks data, 4:30 p.m. EST Tuesday (Recasts, updates market activity and prices)

By Gene Ramos

NEW YORK, Dec 5 (Reuters) - Oil prices fell back abruptly in afternoon trading on Monday after the euro slipped back against the dollar on a report that several major European countries may be put on credit-watch negative by Standard & Poor’s.

The slide back followed early gains on fears rising tensions with the west could disrupt Iranian crude shipments.

However, even before the report of the potential S&P downgrades by the Financial Times, oil prices had pared their gains due to data showing slowing U.S. and China service sectors.

At the same time, hopes for a breakthrough summit of European policymakers on Friday for a firm plan to the region’s debt crisis also gave way to skepticism that a durable solution could be forged.

By 2:15 p.m. EST (1915 GMT) ICE Brent crude LCOc1 traded in London at $109.65 a barrel, falling 29 cents, after hitting an early high of $111.62. Last week, Brent rose more than 3 percent, its biggest weekly gain since mid-October.

U.S. crude CLc1 was down 38 cents at $10.58, sliding from an early session high of $102.44, its highest intraday since Nov. 17. Last week, U.S. crude rose 4.3 percent.

The euro surrendered its gains against the dollar to hit a session low after the FT report said several major European countries may be put on credit watch negative by ratings agency Standard & Poor’s. [USD/]

The dollar erased losses for the day and was up 0.01 percent against a basket of currencies. .DXY (Additional reporting by Claire Milhench in London, Francis Kan in Singapore; Editing by David Gregorio and Bob Burgdorfer)

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