* China inflation jumps to 32-month high
* Allies vow to keep up military campaign in Libya
* Coming Up: U.S. March consumer prices; 1230 GMT
(Adds China's demand, updates prices)
By Florence Tan
SINGAPORE, April 15 (Reuters) - Brent crude held steady
above $122 a barrel on Friday after China's economic growth beat
forecasts despite government efforts to cool expansion and put
the brakes on inflation.
Strong growth in the world's second-largest oil consumer is
bullish for fuel demand, but may stoke concern that Beijing will
tighten monetary policy again in moves that could slow
consumption.
Prices were also supported by nagging worries that more
supply in the Middle East and Africa could be at risk as
fighting in Libya continued.
ICE Brent crude <LCOc1> for June was up 34 cents at $122.34
a barrel by 0659 GMT after gaining as much as 57 cents earlier.
U.S. crude futures <CLc1> for May rose for a third day to
$108.38 a barrel, up 27 cents.
"With CPI above the government's desired levels, domestic
fuel prices will stay in check, indirectly subsidising
consumption growth, which bodes well for higher oil prices
ahead," said Gordon Kwan, head of energy research at Mirae
Assets Securities in Hong Kong.
China's implied oil demand grew by double digits for the
sixth consecutive month in March, but was down from February as
refineries scaled back runs on maintenance and on soaring crude
costs. []
Analysts expect China to raise reserves at banks and hike
interest rates to put a lid on consumer prices after the
country's turbo-charged growth eased just a touch in the first
quarter, while its inflation jumped to a 32-month high.
[]
Dongming Xie, economist at OCBC Bank in Singapore, said the
data suggests there is still room for China to tighten further.
"We think China is likely to front load the tightening
policy this quarter, riding on the still strong growth
momentum," he said. "We expect one interest rate hike in June
and one more reserve requirement ratio hike in April or May."
LIBYA
Expectations of a global economic recovery, a weak dollar
and fears of supply disruption in the Middle East and Africa
supported oil prices.
Surging inflation pressures and the natural disasters that
ravaged Japan last month look unlikely to stall an ascendant
global economy, a Reuters poll of around 350 economists showed.
[]
The dollar index , which tracks the greenback's
performance against a basket of major currencies, rose slightly
in Asia on Friday after falling to a 16-month low.
Britain, France and the United States vowed on Friday to
keep up their military campaign in Libya until Muammar Gaddafi
gives up power, while the defiant leader pounded the city of
Misrata with missiles. []
"It is important to remember that it is not demand, but
supply pressures, that are driving oil pricing," J.P. Morgan
analysts led by Lawrence Eagles said in a note.
"We do not yet feel that the underlying tensions that risk a
further run-up in prices have gone away."
Yemen's opposition rejected on Thursday an offer to join
Gulf-mediated talks on a transfer of power in the Arabian
peninsula state, and set a two-week deadline for President Ali
Abdullah Saleh to step down. []
(Additional reporting by Kevin Yao in BEIJING; Editing by
Michael Urquhart)
