* Pace of U.S. economic growth worries investors * Refinery capacity expansion boosts China oil appetite * Coming Up: Euro zone unemployment rate; 0900 GMT (Updates prices) By Luke Pachymuthu SINGAPORE, April 2 (Reuters) - Brent crude steadied under $111 a barrel on Tuesday as concerns over the pace of economic recovery in top consumer the United States countered prospects of stronger appetite in Asia. Mixed data from key energy consumers -- a rise in China's factory activity and a slowdown in U.S. manufacturing last month -- restricted oil prices to a tight range. Brent dropped 30 cents to $110.78 a barrel by 0737 GMT, after hitting a high of $111.12 earlier in the session. U.S. crude fell 30 cents to $96.77 a barrel. But investors anticipate more downside pressure on oil markets as cooling U.S. factory activity in March suggests the world's largest economy lost some momentum at the end of the first quarter. "You see the U.S. economy settling into a long hard grind of moderate growth of around 1 to 1.5 percent, growth in previous recoveries was closer to 3.5 percent," said Ric Spooner, chief market analyst at CMC Markets, in Sydney. "With this kind of growth, the United States is going to struggle to bring down unemployment, which is a real drag on the economy." U.S. crude may also be hurt by a pipeline leak in Arkansas that threatens to increase the glut of oil in the U.S. Midwest. But demand from Asia may help cushion prices. Saudi Arabia Oil Minister Ali Al-Naimi said on Monday he expected to see a recovery in demand for the kingdom's crude in Asia but stopped short of quantifying the expansion. China, the world's second-largest oil consumer, imported 1.08 million barrels a day of crude from Saudi Arabia in 2012, up more than 7 percent from the previous year. "Fundamentally China is now on a massive drive to expand its refining capacity, and with that comes expansion to oil-related infrastructure like pipelines, storage tanks ... so it is only logical to see their demand for oil rise as well," said Tony Nunan, a risk manager at Mitsubishi Corp in Tokyo. "On top of all that, Naimi also knows that his crudes are reasonably priced, and that is another reason why he is anticipating demand for Saudi crudes to go up." PEGASUS Exxon Mobil continued efforts to clean up thousands of barrels of heavy Canadian crude oil spilled from a near 65-year-old pipeline in Arkansas. Exxon's Pegasus pipeline, which can carry more than 90,000 barrels per day (bpd) of crude to Texas from Illinois, is used to supply U.S. Gulf Coast refineries. "Any kind of bottleneck will cause weakness in the mid-continent, so you could see some temporary weakness in WTI," Nunan said. "But this is also the time when U.S. refineries are starting to ramp up in preparation for the gasoline season." A Reuters poll showed that U.S. commercial crude inventories may have risen by 2.3 million barrels for the week ended March 29, while refinery use was expected to have expanded 0.5 percentage points from the prior week's level of 85.7 percent of capacity. (Editing by Himani Sarkar)

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