Brent climbs above $107 on hopes of Fed tapering delay

By Osamu Tsukimori

TOKYO (Reuters) - Brent crude rose above $107 a barrel on Monday, after three days of losses, amid expectations the Federal Reserve would maintain its economic stimulus at this week's policy meeting.

The U.S. central bank is unlikely to shift away from its monthly $85 billion in bond purchases at the end of its two-day meeting on Wednesday as it waits for more evidence on how Washington's budget battle has hurt the economy.

The bond purchases have spurred the U.S. economy and helped boost liquidity in commodity markets, including oil.

Brent fell 2.7 percent last week, the biggest weekly drop in a month, as concern about higher supply and faltering demand offset signs of faster economic growth in major consumer China.

Brent for December delivery was up 49 cents at $107.42 a barrel by 0744 GMT. The contract hit $106.27 on Friday, its lowest since August 8.

U.S. crude was down 11 cents at $97.74 a barrel.

"It looks like we are getting farther and farther away from a U.S. tapering," said Ken Hasegawa, commodity sales manager at Newedge Japan.

Analysts say the Fed could stand pat for the rest of the year as data released since a partial U.S. government shutdown ended has been surprisingly weak. Even before the 16-day shutdown, job growth slowed in September.

Expectations that the Fed might start curbing its bond purchases by the end of this year had fuelled declines in the prices of riskier assets before investor focus shifted to the wobbly fiscal situation in Washington from late September.

Technical charts suggest Brent could rebound to $107.65 per barrel, as it has completed a five-wave cycle, according to Reuters market analyst Wang Tao.

IRAN TALKS

Investors are also keeping an eye on a meeting of experts from Iran and six world powers on October 30-31.

Western diplomats say the meeting, scheduled to take place a week before the next round of negotiations in Geneva in November, could be instrumental in defining the contours of any preliminary agreement on Iran's uranium enrichment campaign.

U.S. and European sanctions against Iran over its disputed nuclear programme have cut oil exports from the OPEC member by more than half, underpinning global oil prices.

Iran has not halted its most sensitive uranium enrichment work, a senior Iranian parliamentarian said on Saturday, contradicting a statement by another lawmaker last week.

(Editing by Manolo Serapio Jr., Himani Sarkar and Alan Raybould)