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Oil market mixed on China, Iraq developments

London - World oil prices diverged on Tuesday, as traders tracked Chinese manufacturing data and violence in Iraq.

US benchmark West Texas Intermediate for August rose 41 cents to $105.78 a barrel.

Brent crude for delivery in August sank 95 cents to $112.35 in late morning London deals.

Chinese manufacturing activity expanded at its fastest pace this year in June, an official survey showed Tuesday, in a sign that Beijing's attempts to tackle slowing growth in the world's number two economy are gaining traction.

The data is a key focus for the oil market because China is the world's biggest energy consuming nation.

The official purchasing managers' index (PMI) hit 51.0 last month, the National Bureau of Statistics said in a statement. The figure is up from 50.8 in May and the best since a similar reading of 51.0 in December.

The index tracks manufacturing activity in China's factories and workshops and is a closely watched indicator of the health of the economy. A reading above 50 indicates growth, while anything below points to contraction.

Traders were, meanwhile keeping a close watch on the security situation in major crude producer Iraq.

Islamist militants who have overrun swathes of territory in Iraq's north on Sunday declared a caliphate in the regions they control, as fighting with government forces continued unabated.

The militants, who began a lightning offensive on June 9, have yet to directly threaten the key oil-producing region in the country's south.

The violence in Iraq has a direct bearing on global crude prices because the country is the second-biggest oil exporter in the 12-nation Organization of the Petroleum Exporting Countries (Opec) after Saudi Arabia.

It has more than 11% of the world's proven resources and produces 3.4 million barrels a day.

Crude futures had fallen on Monday amid signs of higher Opec production.

Analysts said the market was pushed lower by indications that Opec production had risen some 278,000 barrels per day (bpd) in June to counter worries about potential attacks on Iraq's oil facilities.

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