UPDATE 4-Oil falls towards $69 on recovery concerns

                                
 * Nigerian rebel disarms, Iran engages on nuclear issue
                                
 * Dollar weakens, European stocks edge higher
                                
 * U.S. ISM data due later Monday

                                
 (Updates prices, adds analyst quotes)
                                
 By Alex Lawler
                                
 LONDON, Oct 5 (Reuters) - Oil fell towards $69 a barrel on
Monday, extending the previous session's drop, pressured by
jitters over the pace of U.S. economic recovery and easing
concerns about Iran and Nigeria.
                                
 Crude fell more than 1 percent on Friday as doubts over a
recovery resurfaced after data showed U.S. employers cut 263,000
jobs in September and the employment rate had soared to a
26-year high. [ID:nN02314318]
                                
 "With U.S. macro numbers taking a turn for the worst, the
path of least resistance in a variety of energy complexes will
be lower over the coming weeks," said Edward Meir, analyst at MF
Global.
                                
 "Along with energy's uninspiring fundamentals, the complex
has to also keep a wary eye on a faltering U.S. equity market
and the fact that two key geopolitical "props" -- Iran and
Nigeria -- seem to be fading in terms of importance."
                                
 U.S. crude for November <CLc1> slipped 79 cents to $69.16 a
barrel by 1107 GMT. The contract settled down 87 cents at $69.95
a barrel on Friday. London Brent <LCOc1> fell 87 cents to
$67.20.
                                
 The dollar weakened <.DXY> against a basket of currencies
and European equities edged higher <.FTEU3>. A weaker dollar can
boost investor demand for oil and other commodities.
                                
 "For now, the support on oil is coming more from the
continued pressure applied on the dollar index than from the
global economic data or from recent oil fundamental data
points," Olivier Jakob of Petromatrix said.
                                
 "We started last week with the need to price some
geopolitical premium for Iran and Nigeria. We start this week
with the need to take that geopolitical premium off."
                                
 
                                
 REBEL DISARMS
                                
 Oil gained nearly 6 percent last week, bolstered by a
surprise drop in U.S. gasoline inventories as well as tensions
between major oil exporter Iran and the West over Tehran's
nuclear work.
                                
 Still, prices are likely to lose some support after Iran and
the U.S. described recent talks as productive and with Iran
allowing United Nations inspectors into a uranium enrichment
plant. [ID:nL4526913]
                                
 In a further easing of tension, the last prominent Nigerian
militant leader agreed to halt fighting in the oil-producing
Niger Delta and surrendered his weapons on Sunday.
[ID:nL4527500]
                                
 Attention will focus later on the U.S. Institute for Supply
Management services index due at 1400 GMT. The service sector is
thought to have been on the verge of growth in September after
11 months of contraction. [ID:nN02523757]
                                
 Oil hit a 2009 high of $75.00 in August and has rallied 55
percent so far this year. It hit a record high above $147 in
July 2008, only to collapse in the following months as the
economic crisis eroded demand.
                                
 Bank of America-Merrill Lynch said in a report oil may rise
above $100 next year without policy action to curb demand or an
unexpected supply boost, supported by continued "loose" monetary
policy in developed economies.
 (Reporting by Alex Lawler and Fayen Wong; Editing by Sue
Thomas)