* China economic data threatens fuel demand outlook * U.S. crude stockpiles fall 2.8 mln bbls -EIA * Coming up: U.S. weekly jobless claims at 1230 GMT (Updates prices) By Florence Tan SINGAPORE, July 25 (Reuters) - Brent crude slipped below $107 a barrel on Thursday after weak Chinese economic data dimmed the outlook for fuel demand in the world's No. 2 oil consumer, while its spread with U.S. crude widened as investors took profits. Oil fell for a second day after preliminary data showed China's manufacturing activity hit an 11-month low in July and its job market weakened, raising concerns of slower oil demand growth. Confirmation of a fall in U.S. oil inventories failed to support prices. Brent crude for September had fallen 46 cents to $106.73 a barrel by 0652 GMT, after settling on Wednesday at its lowest since July 4. U.S. crude dropped 52 cents to $104.87, after earlier slipping to $104.72, its lowest in 10 days. "There is no supply shortage and it will take time for the global economy to recover," said Ken Hasegawa, a commodity sales manager at Newedge Japan. China's economic growth will stabilise at lower levels and will no longer be a "giant oil demand driver", he said. Investors had sold West Texas Intermediate (WTI) crude futures to book profits after Brent's spread to U.S. crude CL-LCO1=R touched parity on Friday. The spread widened to as much as $2.12 on Thursday after settling at $1.80 in the previous session. Investors had poured money into WTI in the past month as they expected new U.S. pipeline capacity to alleviate a Midwest supply glut by moving it to the Gulf Coast from Cushing, Oklahoma, the delivery point for the U.S. crude contract. "After the spread hit parity, there's no reason for WTI to be much stronger," Hasegawa said, adding that technical charts showed the contract had been overbought. The recent strength in WTI prices could also curb demand for domestic crude on the U.S. east coast as refiners turned to cheaper seaborne Brent-linked grades, he said. U.S. crude oil stockpiles declined last week for the fourth straight week, Energy Information Administration (EIA) data showed on Wednesday, while both gasoline and middle distillate stocks surprised with falls against expectations for gains. U.S. crude inventories fell by just under 30 million barrels over the four weeks to July 19, the biggest four-week decline on records dating back to 1982. "Bottom line, domestic crude production hit the highest high, 7.56 million barrels per day, since 1990, while the end of the summer driving season is now in sight," said Stephen Schork, editor of The Schork Report in Villanova, Pennsylvania. "All in all, it was a bearish report." (Editing by Tom Hogue and Joseph Radford)

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