* Oil falls more than $4, financial turmoil threatens demand
* Britain's capital injection, HK rate cut fail to reassure
* Britain's FTSE 100 falls 6.8 percent
(Corrects to make clear Tony Machecek is an analyst at Bache
Financial, not MF Global)
(Updates throughout)
By Joe Brock
LONDON, Oct 8 (Reuters) - Oil fell by more than $4 to a
10-month low on Wednesday as expectation mounted the worst
international financial crisis since the 1930s would have a
major impact on demand for fuel.
U.S. light crude for November delivery <CLc1> fell $3.12 to
$86.94 a barrel by 1007 GMT. Earlier it had fallen by more than
$4 to $86.05, its lowest level since Dec 6, 2007.
London Brent crude <LCOc1> fell by $2.86 to $81.80 a barrel.
The slide was in line with weakness across financial
markets, which registered deep losses even after British Prime
Minister Gordon Brown and Finance Minister Alistair Darling held
a joint news conference to outline a 50 billion pound rescue
package for British banks [].
Darling said he wanted to reduce the "fear factor" in the
banking system, but it was not enough to stop Britain's top
share index the FTSE 100 from falling by 6.8 percent
[].
Earlier, Hong Kong's decision to slash its main interest
rate by 100 basis points -- the biggest cut since the benchmark
started a decade ago -- failed to support Asian markets.
[]
"This morning has been totally dominated by financial
markets. Weak stock markets and poor economic outlook seems to
be main driving force." said Tony Machacek, an analyst at Bache
Financial.
"This morning's comments from Gordon Brown and Alistair
Darling don't appear to have given an obvious boost and with
financial markets in a major tailspin, it is difficult to see an
end to this downward trend in crude prices."
Later on Wednesday, attention will turn to oil inventory
data from the U.S. government's Energy Information Agency (EIA),
expected to be released at 1435 GMT. An increase in inventories
could put further pressure on crude prices.
Crude stocks probably rose for the second week in a row last
week as imports continued to rebound after storm disruptions, a
Reuters poll of 11 analysts showed. [
Underlining the impact of the financial crisis on fuel use,
the EIA on Tuesday cut its oil demand growth outlook for next
year by 15 percent from a forecast made last month, blaming the
deteriorating global economy. [ID:nN07419866]
Signs members of the Organization of the Petroleum Exporting
Countries (OPEC) have become uneasy about oil's sharp price drop
also failed to hold up prices, following a $2 a barrel rise on
Tuesday.
Libya joined fellow OPEC members Iran and Iraq in expressing
concern this week about the impact of the crisis on oil demand.
"If this volatility continues, OPEC will have to do
something," Shokri Ghanem, chairman of Libya's National Oil
Corp, told Reuters on Tuesday. []
OPEC's next scheduled meeting is in Algeria in December.
(Reporting by Joe Brock; Editing by Barbara Lewis and Anthony
Barker)
