(Reuters) - Brent crude oil fell below $108 on Friday after a European Union summit left the bloc divided over moves to build a fiscal union to rescue the euro and following Chinese and German data pointing to slower global growth. Twenty-three of the 27 EU leaders at a summit in Brussels agreed on tighter integration with stricter budget rules for the euro zone, but Britain rejected proposed amendments to the EU treaty after failing to secure concessions for itself. The split deepened worries that policy makers would fail to tackle the euro zone debt crisis, leading to slower economic activity and lower demand for oil. Sentiment also softened after Chinese industrial output growth hit its slowest pace in two years, although this was offset by the prospect of further policy easing at the world's no. 2 oil consumer after inflation plunged to a two-year low. ICE Brent futures fell $1 to a low of $107.11 per barrel before recovering a little to around $107.65 by 0935 GMT. U.S. crude futures were down 40 cents to $97.94, after losing more than $2 on Thursday after the ECB news. "The market had expected a bit more from the summit and is disappointed that the ECB isn't doing more," said Cartsen Fritsch, commodities analyst at Commerzbank in Frankfurt. "The Chinese data is poor but not all bad. The inflation data points to some monetary easing, which would be supportive." The euro dipped and languished near a one-week low as hopes faded that the EU summit would be able to contain the euro zone debt crisis. But European shares rose after an initial sell-off, taking comfort from the decision of the 17-country euro zone to press ahead with stricter budget rules. IRAN China's annual inflation rate fell in November to 4.2 percent, the lowest in more than a year, fuelling expectations of further monetary policy easing as economic activity at the world's no.2 oil consumer slows. The inflation rate is now close to the government's official target of 4 percent and has dropped rapidly since hitting a three-year high of 6.5 percent in July. Chinese industrial output rose 12.4 percent from a year earlier, slowing from October's 13.2 percent, data showed on Friday. "I think these figures will help confirm a clear shift in the monetary policy and the first interest rate cut would be seen in the first quarter of next year," said Wang Jin, analyst with Guotai Junan Securities in Shanghai. German exports posted their biggest fall in six months in October in a sign Europe's largest economy weakened into the fourth quarter as the euro zone debt crisis hammered key markets. The risk of a supply disruption from Iran have risen with European Union leaders expected to call for more sanctions against the Islamic Republic at a summit Friday in Brussels. However, they are not likely to make an explicit call yet for an embargo on Iranian crude oil, amid concerns that the OPEC producer has worked to design a nuclear weapon. The senior geopolitical risk analyst at Barclays Capital has said the chance of a military strike on Iran has roughly tripled in the past year. New York-based analyst Helina Croft said even increasing sanctions was raising the risk of an oil price spike. Croft said the risk of either an Israeli or U.S. strike on Iranian nuclear facilities remained low but had risen to between 25 and 30 percent from 5-10 percent last year. "The U.S. and Europe are ratcheting up the sanctions against Tehran, but it is far from certain the punitive measures will alter the regime's nuclear ambitions, and there is a risk that they could precipitate a deeper crisis," Barclays Capital said. Also providing support to oil was news China's refinery throughput surged to a record of 9.22 million barrels per day (bpd) in November, after a small decline in October, as state oil firms revved up operations.

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