Simon Falush, Reuters   |   Updated: February 22, 2012

Brent crude oil reached a nine-month high on Wednesday, supported by Iran-related supply worries, even as weak economic data in Europe and China cast doubt on the outlook for global growth, denting other demand-sensitive assets.

Brent crude for April delivery was up 36 cents at $122.02 by 1444 GMT after touching the day's peak at $122.19, its highest since last May.

U.S. crude for April was down 26 cents at $105.99 a barrel. The March contract, which expired on Tuesday, closed at $105.84 a barrel, the highest settlement for front-month NYMEX crude since May 4.

The U.N. nuclear watchdog ended its latest mission to Iran after talks on Tehran's suspected secret atomic weapons research failed, a setback likely to increase the risk of confrontation with the West.

Russia warned Israel not to attack Iran over its nuclear programme, saying on Wednesday that military action would have catastrophic consequences.

"Iran is still the main issue; it's keeping prices very well supported," said Andy Sommer, an analyst at EGL in Dietikon, Switzerland.

Asian and European buyers of Iranian crude are cutting purchases. Top Asian consumers of Iranian oil - China, India and Japan - expect cuts of at least 10 percent in Iranian crude imports this year.

The latest developments in the long-running stand-off between Iran and Western nations countered data that indicated the Chinese and European economies are struggling to return to robust growth.

The euro zone's service sector shrank unexpectedly this month, reviving fears that the economy could sink into recession, Markit's Eurozone Services Purchasing Managers' Index showed on Wednesday.

DATA DISAPPOINTS

China's manufacturing sector contracted in February for a fourth straight month as new export orders dropped sharply in the face of the euro area debt crisis, stirring fears about fuel demand in the world's second-largest oil user.

Evidence that the poor economic situation is having a direct impact on the fuel market came from Singapore Airlines, which cut its cargo capacity by 20 percent as persistent weakness in demand and high jet fuel prices piled pressure on its profitability.

Oil traders shrugged off this evidence of economic weakness.

"There's an underlying sense that between the geopolitical concern and the potential for a resurgent U.S. economy, data would have to be pretty grotty to have a marked impact," Nick MacGregor, an oil analyst at Redmayne Bentley in Henley, England said.

The underlying outlook for China helped keep a floor under prices. Analysts expect China to step up its policy of monetary easing to support growth and lift commodities demand in the world's second-largest economy.

Commodities rallied at the start of the week after Beijing cranked up credit on Saturday by lowering the amount of cash banks must hold in reserves.

Meanwhile, crude output in Sudan, Yemen, Syria and the North Sea also was lower, hurt by differing political and production issues.

"Upside price risks are rising as the market finds itself in the unprecedented situation in which OPEC spare capacity is at a trough just as a world economic recovery is gaining momentum," Goldman Sachs analysts said in a note.

Investors' attention will later turn to the outlook for supply in the United States. The American Petroleum Institute is due to release a report on Wednesday at 2130 GMT. The Energy Information Administration will follow with its own data on Thursday at 11 a.m. EST. (Additional reporting by Florence Tan in Singapore, editing by Jane Baird)

---