UPDATE 1-Oil hovers around $112 on weak economic outlook

                                
 * Oil down as mortgage crisis worries weigh on sentiment
                                
 * Concerns ease as tropical storm caused only minor damage
                                
 * Conflict between Russia and Georgia poses supply threats
 (Recasts, adds new quotes)
                                
 SINGAPORE, Aug 19 (Reuters) - Oil dipped below $112 a
barrel on Tuesday before recovering slightly, dragged down by a
weak economic outlook for the United States and Europe.
                                
 U.S. crude <CLc1> fell 82 cents to $112.05 a barrel by 0429
GMT, while London Brent crude <LCOc1> dropped 84 cents to
$111.10.
                                
 The U.S. mortgage crisis, consumers' anxiety over a
worsening job market and a weak economic outlook in Europe
continued to keep a lid on crude prices, which have slid around
24 percent since their peak of more than $147 a barrel in
mid-July.
                                
 Home builder sentiment in the U.S. was at a record low in
August, depressed by ever-tightening lending conditions and a
flood of foreclosed homes, data from the National Association
of Home Builders showed. [ID:nN18452752]
                                
 "The lack of economic growth in the West will impact
demand," said an oil analyst who decline to be named. "Without
economic growth, people are coming back to fundamentals."
                                
 Prices also fell as concerns over a possible supply
disruption in the Gulf of Mexico eased, after a tropical storm
swept through the region without causing major damage.
                                
 Tropical Storm Fay swept over the Florida Keys with heavy
rain and 60 mph (97 kph) winds and churned towards the Florida
mainland on Monday after killing more than 50 people in the
Caribbean.
                                
 However, the sixth storm of the 2008 Atlantic season did
not reach hurricane strength before rolling across the
vulnerable, low-lying Florida island chain, where authorities
reported minor flooding. [ID:nN18482157]
                                
 But even as Fay passed, energy markets started eyeing
another low-pressure system about 725 miles (1,167 kilometres)
west-southwest of the Cape Verde islands. [nN18467679]
                                
 "The hurricane season is still a major issue as seen in
2005 with Katrina. We have to be mindful of that," said Peter
McGuire, managing director of Commodity Warrants Australia.
                                
 Security risks still featured with Russian troops and tanks
remaining deployed in several areas of Georgia on Tuesday, in
apparent defiance of Western pressure to withdraw quickly.
                                
 BP Plc <BP.L> said exports of Azeri oil by rail to Georgia
had stopped because of damage to a railway line in Georgia.
[ID:nLI102850]
                                
 Russia's Defence Ministry has said the army's withdrawal
from Georgia had started, but on Monday a Reuters correspondent
who travelled to the central town of Gori saw little evidence
of a pullout from the area. [ID:nLI239157]
                                
 On Tuesday, the dollar was little changed from late U.S.
trade at 110.06 yen <JPY=>, holding off a seven-month peak of
110.67 yen struck last week.
 (Reporting by Seng Li Peng; Editing by Ben Tan)