UPDATE 3-Oil holds above $119; China offsets U.S., Europe

William Hardy

* China's April PMI at 53.3 vs 53.1 in March

* Spain in recession, US economic growth appears to slow

* U.S. crude stocks to post 6th weekly rise - poll

(Updates previous Singapore)

LONDON, May 1 (Reuters) - Oil held above $119 a barrel on

Tuesday as economic expansion in China helped counter a sluggish

U.S. economy and bubbling euro zone debt crisis that could

depress demand for fuel.

China's factory sector grew at a slightly higher rate in

April from the previous month, a sign its economy may have

bottomed out in the first quarter.

The world's no. 2 oil consumer is expected to account for

nearly half of global incremental oil demand this year.

Brent crude edged up 9 cents to $119.56 a barrel by

0829 GMT. U.S. crude ticked up 3 cents to $104.90.

"China is still in an expansionary phase and we saw a slight

tick-up on the month," said Ben Le Brun, a Sydney-based market

analyst at OptionXpress. "That will offset that negativity we

saw filtered through from Europe last night."

But debt woes in Europe continued to cast a pall over the

region's economies, with Spain, the fourth-largest economy in

the euro zone, sinking into recession in the first quarter.

In the United States, where the economy slowed going into

the second quarter, spending increased only modestly last month

and a gauge of Midwest business activity fell


Higher OPEC output in April as well as analysts'

expectations for a sixth weekly rise in U.S. crude inventories

due in part to rising domestic production could also weigh on


OPEC's April output was at its highest since 2008 as extra

crude from Iraq and Saudi Arabia helped make up for tighter

sanctions on Iran, whose own oil output sank to the lowest in

two decades, a Reuters survey found.

Iraq's crude exports rose to 2.508 million barrels per day

(bpd) in April from 2.317 million bpd in March as new offshore

export terminals helped increase sales, the head of its State

Oil Marketing Organisation said on Tuesday.

"Unless OPEC curtails production - which we see as unlikely

in today's elevated price environment - inventories should build

above-normal through the third quarter," said Morgan Stanley.

"A diplomatic solution to Iran's nuclear ambitions or a

coordinated SPR (strategic petroleum reserves) release, both of

which are increasingly possible, may also present additional


(Reporting by Peg Mackey, additional reporting by Florence Tan

in Singapore, editing by William Hardy)