* Libyan rebels, govt agree to reopen occupied oil ports
* Iran hopes draft accord will follow nuclear talks
* Tension rises in eastern Ukraine
* U.S. jobs data reinforces macro-economic outlook
* Coming Up: U.S. employment trends data at 1400 GMT (Updates detail, comment, prices; paragraphs 3, 6-8)
By Christopher Johnson
LONDON, April 7 (Reuters) - Brent crude oil fell below $106 a barrel on Monday, snapping a two-day rise, after Libyan rebels occupying four eastern oil ports agreed to end an eight-month blockade, raising the prospect of increased supply to world markets.
The end to the port standoff, a major advance for the north African exporter, is taking some of the supply worries off the market that had helped push prices to as high as $112 for the year.
Brent crude fell $1.32 to a low of $105.40 per barrel before recovering to around $105.72 by 1050 GMT, down $1.00. Brent ended last week 1.2 percent lower.
U.S. oil was down 50 cents to $100.64 by 1050 GMT.
Libya's Zueitina and Hariga ports, held by federalist rebels demanding more autonomy from Tripoli, will open immediately, while the larger ports of Ras Lanuf and Es Sider will be freed in two to four weeks after more talks.
"The sell-off follows the Libyan news, but it is a little surprising, because only two small ports will reopen at first and the more important ones will stay closed for some time," said Carsten Fritsch, a senior commodities analyst at Commerzbank.
Morgan Stanley analysts were cautious over the prospects for higher Libyan oil production, saying any rebound in output would reinforce a bearish outlook for oil this year.
"We are sceptical of any interim, let alone long-term, agreement," Morgan Stanley said in a note to clients.
"Some ports could reopen briefly, especially with budget and payroll issues, but previous announcements have disappointed. We believe market optimism will quickly fade without a sign of progress."
Further losses in oil were, however, checked by renewed tension in Ukraine, which raised concerns over the possibility of a deeper diplomatic rift between Russia and the West.
Pro-Russian protesters broke into state security headquarters in the eastern Ukrainian city of Luhansk, seizing weapons, and highway police closed down entrances into the city, local police said on Monday.
"If the Ukraine tension rises again, it could lead to an escalation of sanctions, which would could be bullish for oil," Fritsch at Commerzbank said.
Markets were also keeping an eye on Iran, which is hoping to get Western sanctions lifted, allowing it to sell more oil.
The United States dismissed suggestions that Iran was exporting much more oil than it is allowed to sell under a preliminary nuclear deal and predicted that aggregate Iranian oil sales would meet targets set for Tehran.
The remarks from a senior U.S. official came ahead of a new round of senior-level negotiations between Iran and the United States, Britain, France, Germany, China and Russia in Vienna on April 8-9.
Iranian deputy foreign minister Abbas Araqchi was quoted as saying by Press TV that Iran hoped progress would be made at talks this week to allow for the drafting of an accord to settle a dispute over its nuclear programme.
Economic data was also supportive.
Strong U.S. jobs growth added to a range of indicators from manufacturing and services sector activity to automobile sales signalling strength as the first quarter ended.
The promising economic indicators boosted expectations of strong gasoline sales as the world's top oil consumer, the United States, enters the peak summer driving season. (Additional report by Manash Goswami in Singapore; Editing by Jason Neely and Jane Baird)
