* Front-month Brent touches highest since March 4
* Libya's western oilfields stay closed
* Strongest Chinese factory data for five months
* U.S. home resales rise in April
* U.S. crude stocks fell by 7.2 mln barrels last week (Updates with settlement prices)
By Elizabeth Dilts
NEW YORK, May 22 (Reuters) - Global oil prices slid lower on Thursday after Brent touched a 2-1/2 month high and traders took profit on a rally that was driven by ongoing violence in Libya and positive economic data in China and the United States.
Brent and U.S. oil prices surged on Wednesday after a U.S. Energy Information Administration report showed crude stocks fell by 7.2 million barrels last week.
The ongoing conflict in Libya underpinned prices as the OPEC member's major western oilfields were still closed, and protesters shut the headquarters of a state oil company that runs the only eastern oil port that remained open during the nine-month stand-off with rebel groups.
Data out of China showed the factory sector turned in its best performance in five months in May, and U.S. home resales rose in April, showing hopeful signs that the stalled housing market is turning toward recovery.
Brent crude settled 19 cents lower, after touching a session high of $111.04, the highest price since March 4. U.S. crude fell 33 cents to 103.74 a barrel, after settling up $1.74 on Wednesday, its biggest one-day gain in six weeks.
"Both WTI and Brent crude found support at the upper end of the ranges they have been trading in for the past few months, as Chinese manufacturing came in much better than expected," said Matt Smith, analyst at Schneider Electric in Louisville, Kentucky.
Libya's output held at 230,000 barrels per day (bpd), well below the country's 1.6 million bpd capacity.
The government had said nearly two weeks ago it had reached an agreement with rebel groups allowing the fields to reopen. But negotiations have stopped due to intense fighting in major cities, while a renegade general's troops stormed the nation's parliament.
Investors also kept an eye on the ongoing conflict in Ukraine, where presidential elections are scheduled for Sunday.
Lending background support, minutes of the U.S. Federal Reserve's last meeting released Wednesday reassured investors that policymakers would continue to support the U.S. economy and would not yet ease monetary policy.
Floor trading will be closed on Monday and there will be no settlement on the New York Mercantile Exchange due to the U.S. Memorial Day holiday. (Additional reporting by Christopher Johnson in London and Jacob Gronholt-Pedersen in Singapore; Editing by William Hardy, Jane Baird, Peter Galloway and Chizu Nomiyama)