* Stock markets, commodities tumble on Cyprus bailout deal * Dollar, gold rally on worries over potential bank runs * Investors eye Cyprus parliament vote over deposit tax (Updates detail, prices; paragraphs 1,4, 8-10) By Christopher Johnson LONDON, March 18 (Reuters) - Crude oil fell towards $109 a barrel on Monday as stock markets tumbled and the dollar strengthened after an unusual bank bailout proposal for Cyprus threatened to trigger fresh turmoil in the euro zone. A proposal that Cyprus would tax depositors as part of its bailout plan sparked fears of a run on some banks in the region, driving down the euro and other riskier assets such as Asian shares and base metals. However, a series of recent positive numbers from the world's top oil consumer the United States and worries over supply disruption helped stem further losses in oil. Brent futures fell $2.04 per barrel to a low of $107.78 a barrel before recovering to trade around $109.26 by 1500 GMT. U.S. oil lost 26 cents to $93.19. "The bailout conditions for Cyprus, specifically the unprecedented removal of funds from depositors' accounts, is sending share and commodity prices lower," said Tamas Varga, oil analyst at oil brokers PVM Oil Associates in London. "This step is causing shivers throughout the financial world, and it has created the fear that a reaction in other peripheral eurozone countries could hit the whole banking sector in Europe," Varga added. Oil markets will remain volatile for the next few days as investors watch for any spillover of the developments in Cyprus to other EU nations, analysts said. Cypriot ministers were trying on Monday to revise a plan to seize money from bank deposits before a parliamentary vote on Tuesday that will secure the island's financial rescue or could lead to its default, with reverberations across the euro zone. EU BAILOUT The weekend announcement that Cyprus would impose a tax on bank accounts as part of a 10 billion euro ($13 billion) bailout by the European Union broke with previous practice that depositors' savings were sacrosanct. The euro and stock markets fell on concern the euro zone crisis was returning. The uncertainty surrounding the proposed bailout drove investors to the safety of gold, which rose above $1,600 an ounce for the first time in more than two weeks. The dollar index rose 0.4 percent on Monday. A stronger dollar tends to weigh on dollar-denominated commodities such as oil. Technical signals are mixed for Brent as it is not clear that a rebound from the March 13 low has completed, Reuters technical analyst Wang Tao said. U.S. oil may drop to $91 as it failed to break resistance at $93.72 for the second time. Further losses in oil were capped by expectations of a steady revival in demand growth from the United States. U.S. manufacturing output bounced back in February in the latest signal of strength in an economy that is showing clear momentum. Factory production increased 0.8 percent last month after falling 0.3 percent in January, the Federal Reserve said. The gain was broad based and double what economists had expected. Worries of an escalation in a standoff between the West and Iran over Tehran's disputed nuclear programme could also help ensure prices don't fall much further. Concerns of supply disruption from the Middle East have kept Brent above $100 a barrel through most of 2012 and this year. (Additional reporting by Osamu Tsukimori in Tokyo; editing by James Jukwey)

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