UPDATE 7-Oil falls 3 percent on recovery jitters

                                
 * U.S. stocks fall, following losses in Europe, Asia
                                
 * Japan pulls out of recession, but outlook shaky
                                
 * Eye on Hurricane Bill in Caribbean
                                
 (Recasts, updates prices, adds detail, changes from
previous dateline LONDON)
                                
 By Edward McAllister
                                
 NEW YORK, Aug 17 (Reuters) - Oil fell over 3 percent to
below $66 a barrel on Monday, its lowest this month, as
investors became more cautious about the pace of global
economic recovery and a potential revival in energy demand.
                                
 U.S. equities fell broadly, pressured by persistent concern
for the global economy, with data from Japan, the third largest
oil consumer, showing that economic recovery may be shaky.
[ID:nT212505] [.N]
                                
 U.S. crude oil futures <CLc1> for September fell $2.14 to
$65.37 a barrel by 11:19 a.m. EDT (1519 GMT), after earlier
hitting $65.23, the lowest since July 31. Brent crude <LCOc1>
for October lost $2.17 to $69.27.
                                
 The decline added to the market's $3.01, or 4.3 percent
slide on Friday -- the biggest loss since July 29 -- after the
Reuters/University of Michigan Survey of Consumers showed
confidence in early August dropped.
                                
 "Crude and products futures fell to their lowest levels in
more than two weeks as global equities dropped as the dollar
strengthened against other major currencies," Addison
Armstrong, analyst at Tradition Energy in Stamford,
Connecticut, said in a research note.
                                
 The U.S. dollar rose against a basket of currencies as
investors sought a safe haven away from commodities. Early
stock falls in the U.S. followed on from losses in Europe and
Asia. [.EU]
                                
 U.S. stocks opened lower, despite a gauge of manufacturing
in New York state moved into positive territory in August,
suggesting growth in the sector for the first time since April
2008. [ID:nN17369652]
                                
 Japan's economy emerged from its longest recession in at
least 60 years in the second quarter, but analysts said it
would be a long road to a sustained recovery in the world's
third-largest oil consumer. [ID:nT212505]
                                
 Although the Atlantic hurricane season, which can disrupt
Gulf of Mexico oil and gas production, has arrived, analysts
said brimming crude stockpiles in the United States would limit
the impact of a storm on oil prices.
                                
 Hurricane Bill, the first of this season, is expected to
strengthen to a major category 3 hurricane by Wednesday,
possibly reaching the area of Bermuda early on Saturday, the
U.S. National Hurricane Center said. [ID:nN17358071]
                                
 Tropical storm Claudette was downgraded to a tropical
depression over southern Alabama, and tropical depression Ana
was expected to reach the Dominican Republic later on Monday
and could dissipate.
  (Reporting by Gene Ramos and Robert Gibbons in New York, Alex
Lawler in London and Fayen Wong in Perth; Editing by Marguerita
Choy)