RTRS:Brent slips but EU optimism keeps price above $111
* Brent posts weekly gains of nearly 2 percent
* U.S. oil sees biggest weekly gains since Feb
* Italy issues unresolved but market satisfied for now (Adds EFSF chief exec's comments in China; updates prices)
By Seng Li Peng
SINGAPORE, Oct 28 (Reuters) - Brent crude slipped on Friday after rising nearly 3 percent in the previous session, but optimism surrounding Europe's rescue initiatives has kept prices firm above $111, while U.S. crude is on track for its biggest weekly gain since February.
Prices were also buoyed by news the U.S. economy grew 2.5 percent in the third quarter, its fastest pace in a year, taking output back to a pre-recession level, as consumers and businesses stepped up spending, creating momentum that could carry into the last three months of 2011.
Although Brent crude LCOc1 was down 51 cents at $111.57 a barrel by 0540 GMT, prices have posted a weekly gain of almost 2 percent. Prices have also pushed the front-month Brent 200-day moving average above $112.25 a barrel.
U.S. crude CLc1 fell 57 cents to $93.39, but was headed for a weekly rise of 7 percent, its biggest gain since the week ended Feb. 27.
"You got an initial knee-jerk reaction yesterday with prices going up, and probably there's some selling going on now, based on the reality that it's still a way to go to solve the problems," said Tony Nunan, a risk manager with Mitsubishi Corp. based in Tokyo.
"When people have more time to look at it and analyse it, they will realise there are not a lot of details on the European Financial Stability Facility (EFSF)," he said, adding that Italy's problems remained an issue.
But crude oil prices still look healthy, he added.
"Technically and fundamentally, crude oil prices look good. The essential thing is that Europe delivered. Although there are still a lot of problems left, there was some kind of an outcome that was acceptable to the market."
On Thursday, European leaders struck a deal with private holders of Greek debt to write down half their holdings and agreed to boost the region's rescue fund.
U.S. President Barack Obama said the deal had calmed global markets and it was now important the countries follow through on implementation of the pact.
Financial markets also rallied strongly in relief on Thursday after the deal, and Hong Kong shares traded higher on Friday, set for their best week in almost 2-1/2 years.
Crude prices were a tough call, MF Global said in a daily report, with upside momentum countered by an increasingly overbought market. But it saw the European deal as significant and benefiting prices, with the next key resistance levels for U.S. crude expected at $95.50 and $101.83.
Klaus Regling, chief executive of the European Financial Stability Facility (EFSF), said the bailout deal with Greece was an exceptional case and he saw no need to repeat it for other nations.
Regling, in Beijing to meet officials from China's central bank and finance ministry on Friday, said he wanted to hear how the fund could structure investments to attract funds.
Though he does not expect to reach a conclusive deal with Chinese leaders during his visit he expects the surplus-rich country will continue to buy bonds issued by the fund. (Editing by Clarence Fernandez)
