RTRS:UPDATE 2-Brent climbs above $111 as US leaders set to resume budget talks
* Obama to meet congressional leaders at White House at 2000 GMT
* U.S. economic data shows signs of recovery
* Coming up: EIA oil inventory data at 1600 GMT (Updates prices)
By Jessica Jaganathan
SINGAPORE, Dec 28 (Reuters) - Brent crude climbed above $111 per barrel on Friday as U.S. lawmakers launched a last-chance round of budget talks to prevent the world's largest oil consumer from slipping back into recession.
Signs of a recovering American economy also supported U.S. crude prices, which are on track for their biggest weekly gain since mid-August.
Brent crude was up 45 cents at $111.25 per barrel by 0644 GMT, on course to post a weekly climb of about 2 percent and a full-year increase of about 3.6 percent, which would be its smallest gain in four years.
U.S. crude rose 43 cents to $91.30, set for its first yearly loss in four years, although it was on track to end the week about 3 percent higher.
"The U.S. fiscal cliff will continue to direct crude prices until it is resolved," said Natalie Rampono, a commodities analyst at ANZ in Melbourne.
U.S. President Barack Obama will meet congressional leaders from both parties at the White House later on Friday to try to revive negotiations to avoid going over the "fiscal cliff" - tax hikes and spending cuts slated to take effect on Jan.1.
Positive data from the U.S. on Thursday highlighting the momentum building in the economy also supported oil prices.
The number of Americans filing new claims for jobless benefits fell to a nearly 4-1/2 year low and new home sales hit their highest level since April 2010.
But capping gains in prices, U.S. consumer confidence fell more than expected in December, dropping to a four-month low, as the fiscal uncertainty pushed back against the recent optimism on the economy.
Oil also rose as Japan, the world's third largest consumer of the commodity, sped up efforts to turn around its economy.
New Prime Minister Shinzo Abe's repeated calls for "unlimited" monetary easing and policies aimed at reducing the yen's strength have bolstered expectations of a sustained period of yen weakness.
"The Japanese equity market has turned positive, providing good sentiment for global investors, with many making money and putting that money into commodity markets such as the oil market," said Tetsu Emori, a commodity fund manager at Astmax in Tokyo.
U.S. OIL INVENTORIES
The American Petroleum Institute said in a report released late on Thursday that U.S. crude inventories fell 1.2 million barrels in the week to Dec. 21, less than the expected drop.
The U.S. Energy Information Administration's oil inventory report is due on Friday at 1600 GMT. The inventory reports were delayed because of Tuesday's Christmas holiday.
Concerns about potential supply disruptions in the Middle East continued to support oil prices and were reinforced after United Arab Emirates security forces arrested a cell of UAE and Saudi Arabian citizens that the UAE said was planning attacks in both countries and other states.
The international envoy seeking a negotiated solution to Syria's 21-month-old conflict said on Thursday political change was needed to end the violence which has killed 44,000 people. (Editing by Joseph Radford)
