June 29 (Bloomberg) -- Crude oil fell the most in more than three weeks amid concern that the economy in China, the world's fastest-growing energy consumer, is expanding at a slower pace than previously estimated, lessening its need for fuels. Oil lost as much as 3.8 percent as the Conference Board corrected its April gauge for the outlook on China's economy, saying it rose by the smallest amount since November. Equity markets declined and the dollar strengthened against the euro, curbing the appeal of commodities as an alternative investment. "The Conference Board's index for China was much lower than previously thought, so all the Asian markets are down," said Tom Bentz, a broker at BNP Paribas Commodity Futures Inc. in New York. "Stocks and oil are down, and the dollar's up. It's a return of the flight to quality." Oil for August delivery fell $2.85, or 3.6 percent, to $75.40 a barrel at 10:05 a.m. on the New York Mercantile Exchange. Earlier, crude touched $75.28 a barrel in the biggest one-day drop since June 4. It has retreated 10 percent this quarter. The measure of China's economy compiled by the New York- based Conference Board rose 0.3 percent, less than the 1.7 percent gain it reported June 15. The research group said in an e-mailed statement that the previous reading contained a "calculation error" for total floor space on which construction began. The Standard & Poor's 500 Index fell 2.5 percent to 1,047.68, and the Dow Jones Industrial Average lost 2.2 percent to 9,915.42. It was the first time the Dow dropped below 10,000 since June 10. Dollar Strengthens The dollar gained 0.9 percent against the euro. The European currency traded at $1.2162 at 10:07 a.m. in New York from $1.2277 yesterday. Oil also fell amid forecasts that Tropical Storm Alex, which is moving west across the southern Gulf of Mexico, will miss oil-producing areas. It's forecast to make landfall in Mexico, just south of the U.S. border, on July 1 as a hurricane, according to the U.S. National Hurricane Center in Miami. Petroleos Mexicanos, Mexico's state-owned oil company, closed oil-export terminals Cayo Arcas and Dos Bocas as the storm barreled across the Gulf. Pemex, Latin America's largest oil producer, is operating all its rigs and said they will remain open as the storm passes. BP Plc and Royal Dutch Shell Plc, the biggest oil producers in the Gulf, are evacuating hundreds of workers from platforms in the western and central Gulf as a safety precaution. Storm Forecast "It appears the storm is a non-event in terms of damage to the Gulf of Mexico," said Addison Armstrong, director of market research at Tradition Energy, a Stamford, Connecticut-based procurement adviser. "A temporary decrease in output either through imports or offshore production really isn't that critical to the market right now." U.S. oil supplies were the highest in 20 years for the middle of June in the week ended June 18, according to an Energy Department report last week. Inventories probably fell 1 million barrels in the week ended June 25 from 365.1 million the prior week, according to the median estimate of 13 analysts surveyed by Bloomberg News before a government report tomorrow. It would be the first decline in three weeks. Brent crude for August delivery fell $2.11, or 2.7 percent, to $75.48 a barrel on the ICE Futures Europe exchange in London. --With assistance from Grant Smith in London and Mark Shenk in New York. Editor: Dan Stets, David Marino

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