Brent holds above $106, eyes on US, Europe stimulus

>

* Uncertainty lingers ahead of European leaders meet with ECB

* Coming Up: FOMC policy meeting Tuesday, Wednesday

By Luke Pachymuthu

SINGAPORE, July 30 (Reuters) - Brent crude held above $106 per barrel on Monday, after rising for four straight sessions on hopes the United States and Europe will this week announce new measures to shore up their fragile economies, boosting the outlook for oil demand.

Slowing growth in the United States, the world's top oil consumer, has triggered expectations of stimulus measures from the Federal Reserve, which meets on Tuesday and Wednesday. Next on investor radars is Friday's U.S. non-farm payrolls data.

"If unemployment starts to worsen, you can be sure that the FOMC are going to step in and inject more stimulus into the economy," said Tony Nunan, a Tokyo-based risk manager at Mitsubishi Corp.

"The mandate of the FOMC is not just to curb inflation, but it also has to sustain employment, they won't have a choice but to act."

Brent crude edged up 3 cents to $106.50 per barrel at 0219 GMT. U.S. crude dipped 14 cents to $89.99 per barrel, after a four-day winning streak.

Investors are also eyeing the European Central Bank's policy-setting meeting scheduled for Thursday for further trading cues.

The meeting was always in focus given the threat the long-running euro zone crisis poses to the global economy but has become pivotal after the ECB chief Mario Draghi's pledge last week to do whatever was needed to save the euro.

"Mario Draghi is typically cautious, and for him to have come out last week with such strong comments, suggests that he's got to have something in hand," Nunan said.

Optimism was evident across most markets on Monday, with Asian shares extending their gains, as European leaders continued to reassure markets that they would not allow the euro to break up.

On Friday, German Chancellor Angela Merkel and French President Francois Hollande pledged to do everything in their powers to protect the euro after discussing the latest events in the debt crisis by telephone.

But despite the reassurances from Europe's elite, an air of uncertainty lingered with Spanish and Italian bond-yields swelling into dangerous territory.

"Spain and Italy are just too large to be saved by the ECB, if they can keep their bond-yields below the red line, they can continue borrowing and keep going, but this only buys them time," Nunan said.

Oil prices, however, continued to be supported by escalating tensions in the Middle East with rising violence in Syria threatening to further destabilize the region.

Iran continues to face-off with the West over its nuclear programme, fuelling uncertainty in the oil markets.

(Editing by Naveen Thukral and Himani Sarkar)

Energy