* Higher reserve ratios for Chinese banks take effect
* U.S. crude, gasoline stockpiles expected to rise
* Fed seen leaving interest rates steady
(Updates prices, adds quote paragraphs 7-8)
By Alex Lawler
LONDON, Jan 26 (Reuters) - Oil fell towards $74 a barrel on
Tuesday after China implemented a clampdown on lending,
rekindling concern that tightening moves by the world's
second-largest oil user may limit demand.
Crude approached a one-month low after the Chinese move,
which analysts said was a setback for the bullish view in oil
markets that puts the prospect of rising Asian demand ahead of
the market's weak current fundamentals.
"The fundamental link to current prices is weak -- hence oil
prices need at least some general optimism that boom times are
around the corner," said Olivier Jakob, analyst at Petromatrix.
"That general optimism depends a lot on China's consumption,
saving the rest of the world and that will be somewhat
challenged by the Chinese government trying to regulate the
formation of bubbles."
U.S. oil <CLc1> was down 76 cents at $74.50 by 1206 GMT,
having traded as low as $74.14. On Friday, it touched a
one-month intraday low of $74.01. Brent crude <LCOc1> fell 65
cents to $73.04.
Crude oil futures have fallen by more than 6 percent in
January, set for their first monthly decline since July 2009.
China implemented its planned increase in required reserves
for some banks on Tuesday, sources told Reuters. []
Asian stocks fell, copper slipped and the dollar gained. []
European shares lost ground. []
"The Chinese tightening is making people concerned that it
is going to damp down demand, but it won't damp demand by very
much," said Christopher Bellew, a broker at Bache Commodities.
"The market may be forming a base around these numbers, I
think."
RECOVERY JITTERS
Highlighting fears that a global recovery may be sputtering,
South Korea reported weaker-than-expected growth in the fourth
quarter.
Britain came out of recession in the fourth quarter, but
with a lower growth rate than expected. Standard & Poor's cut
its rating outlook on Japan.
Economic reports this week have also raised doubts over the
strength of the U.S. recovery. The Federal Reserve is not
expected to indicate that it will raise its benchmark rate any
time soon when it meets this week. []
The Federal Open Market Committee (FOMC), the Fed's
policy-setting group, begins a two-day policy meeting on
Tuesday.
Oil inventories in the United States, the top oil consumer,
are expected to rise further in reports due this week. Crude
stocks probably rose by 1.7 million barrels, a Reuters poll of
analysts showed on Monday. []
The survey also forecasts gasoline stockpiles probably
climbed 1.4 million barrels and distillates, which include
heating oil and diesel, were predicted to have fallen 1.4
million barrels.
Industry group American Petroleum Institute issues its
weekly inventory report on Tuesday at 2130 GMT. The government's
Energy Information Administration (EIA) follows on Wednesday.
(Additional reporting by Alejandro Barbajosa in Singapore;
Editing by Amanda Cooper)
