* Cyprus bailout plan stokes fear about euro zone
* Oil bounces off lows after U.S. Labor Dept data
* Armed clashes break out at Libyan oil field
(New throughout, adds latest Eurogroup statement on Cyprus
By Joshua Schneyer and David Sheppard
NEW YORK, March 18 Brent crude oil slipped to
near $109 a barrel on Monday after touching a three-month low,
as a plan to tax bank accounts in debt-laden Cyprus sparked
fears of further turmoil in the euro zone.
Prices fell as low as $107.78 a barrel in early trade, a
level last hit in mid-December, but recovered after stronger
employment data in the United States bolstered the outlook for
Saudi Arabia's top oil official also said the current price
won't hurt the economy, indicating the world's largest crude
exporter sees little need to add additional supplies.
Brent crude settled down 31 cents at $109.51 per
barrel after trading between $107.78 and $109.83 during the
U.S. oil fell to a low of $91.76 a barrel before
reversing losses, settling 29 cents higher at $93.74 a barrel.
Oil markets will remain volatile for the next few days as
investors watch for any spillover of the developments in Cyprus
to other euro zone nations, analysts said.
Cypriot ministers were trying to revise a plan to seize
money from bank deposits before a parliamentary vote on Tuesday
that will secure the island's financial rescue or could lead to
its default, with reverberations across the euro zone.
"Although Cyprus is small, there was some concern that it
was being made a test case for policy," said Tim Evans at Citi
Futures Perspective in New York.
"The strong initial reaction has policy makers backpedaling
from the deposit tax idea, but it may be hard for markets to
forget the risk."
Gold rose to a two-week high above $1,600 an ounce and the
U.S. dollar firmed as investors sought out safer assets. A
stronger U.S. currency can weaken dollar-priced commodities like
oil as they become more expensive for overseas buyers.
European equity markets finished lower and the S&P 500 and
Dow Jones Industrial Average both fell by around 0.5 percent.
After oil and equity markets had settled for the day, the
Eurogroup released a statement saying it would give Cyprus more
flexibility on the bank levy that is a condition of its 10
billion euro bailout of the small Mediterranean nation.
After a conference call between euro zone finance ministers,
the Eurogroup said Cyprus should not apply the levy to accounts
holding less than 100,000 euros, though it still expects the
island to raise 5.8 billion euros from levies on larger
Further losses in oil were stopped by expectations of a
stronger economy in the United States, the world's largest oil
consumer, and comments from Saudi Arabia's top energy official
that oil prices near current levels won't hurt demand.
Almost all U.S. states began 2013 with lower unemployment
rates than they had at the start of 2012, according to Labor
Saudi Arabian oil minister Ali al-Naimi said current oil
prices will have no impact on growth in Asia. The region's
biggest economies, including China, have struggled with rising
energy costs in their efforts to boost growth.
Worries of an escalation in a standoff between the West and
Iran over Tehran's disputed nuclear program could also help
ensure prices do not fall much further. Concerns of supply
disruption from the Middle East have kept Brent largely above
$100 a barrel since early 2011.
In Libya, armed clashes broke out at an oil field belonging
to Libya's Waha Oil on Monday, where protesters seeking jobs had
been blocking the site entrance for the last eight days.
A company source said a militia attacked the security forces
guarding the oil field. The protesters have been calling on Waha
to use locally hired vehicles and drivers.
(Additional reporting by Christopher Johnson in London and
Osamu Tsukimori in Tokyo; Editing by Marguerita Choy and David