* Coming Up: Greek party leaders to convene at 1100 GMT
* Coming Up: API oil inventory data 2030 GMT
By Julia Payne
LONDON, May 15(Reuters) - Brent crude oil futures gained on Tuesday, as the euro zone narrowly avoided recession and as better-than-forecast German first quarter GDP data raised hopes that Germany will steer the way through the European debt crisis.
The euro zone economy stagnated, with zero growth, the EU's statistics office Eurostat said on Tuesday.
The results were more positive than forecast, boosting riskier assets, but the region's debt crisis has sapped the life out of the French and Italian economies and widened a split with paymaster Germany.
Brent crude rebounded from earlier losses, rising by 30 cents to $111.87 a barrel by 0934 GMT after sliding to $110.04 on Monday, its lowest intraday price since Jan. 25.
U.S. crude dropped 22 cents to $94.56 a barrel, after Monday's fall to $93.65, the weakest intraday price since Dec. 19.
German gross domestic product grew by 0.5 percent in the first quarter, far exceeding forecasts due largely to robust exports, helping to lift the euro from a four-month low.
"Brent is showing a positive move owing to the news of Germany's better-than-expected GDP," said Thorbjoern Bak Jensen, oil analyst at Global Risk Management.
"But the rise has been tempered by Italy's disappointing GDP and Moody's downgrade."
Moody's Investors Service downgraded the long-term debt and deposit ratings for 26 Italian banks on Monday, citing the country's recession and rising bad debt levels.
Greek party leaders are expected to convene at 1100 GMT on Tuesday but there is little hope President Karolos Papoulias's proposal to form a technocrat government would end the country's political stalemate, making a new election the most likely outcome.
Many market players think a fresh election will make it more likely for Athens to ditch its bailout pledges and hence the euro, even though euro zone finance ministers dismissed talk of Greece's exit as "propaganda and nonsense".
"The Greek situation has reached a breaking point," said Guy Wolf, macro strategist at Marex Spectron, "The EU has prevaricated for two years but they can delay no longer on whether Greece is in or out. I do no see how they can default and stay in the euro, I do not see the point."
Oil prices remained dampened by further signs the world's second largest economy, China, was struggling to maintain its high growth levels.
China's Commerce Ministry said on Tuesday the country's foreign direct investment (FDI) inflows dropped 2.4 percent in the first four months of this year from last year, the longest period of declining inflows since the depths of the global financial crisis.
FDI is an important gauge of the health of the external economy, to which China's vast factory sector is oriented.
U.S. CRUDE OIL STOCKS
The oil demand outlook continued to weigh on prices, U.S. crude inventories were expected to have risen for an eighth straight time last week, a Reuters survey of analysts on Monday showed.
Investors will also look towards Tuesday's meeting by U.S. regulators crafting the final language of the Volcker rule and are expected to discuss how JPMorgan's $2 billion trading loss may impact their work. The rule bans banks from making certain kinds of speculative investments.
Meanwhile the physical market remains well supplied with Saudi producers pumping enough oil to deal with the impact of the sanctions on the oil market, analysts said.
