Brent crude rose Wednesday, staying above $109 a barrel as a larger-than-expected drawdown in U.S. gasoline stocks and positive U.S. economic data trumped concerns over European debt.

Tuesday's meeting of French President Nicolas Sarkozy and German Chancellor Angela Merkel yielded no concrete measures to try and find a way out of Europe's sovereign debt problems, but better-than-expected U.S. industrial production numbers helped bolster sentiment.

Brent crude for October rose 55 cents to $109.68 by 0455 GMT. U.S. crude was up 78 cents at $87.41 a barrel, after slipping $1.23 on Tuesday to settle at $86.65.

"The meeting between Sarkozy and Merkel didn't amount to too much, and that will cap gains in oil futures," Victor Shum, an analyst with energy consultancy Purvin and Gertz, told Reuters.

The French and German leaders proposed a tax on financial transactions and closer joint governance of economic policy, but did not propose increasing the euro zone bailout fund or selling euro zone bonds.

Asian shares fell Wednesday and the euro wobbled after the meeting, while safe-haven asset gold held steady near a record high.

U.S. stockpiles of gasoline fell 5.4 million barrels last week, well above analyst expectations for a 1.3 million barrel draw, data from the American Petroleum Institute showed Tuesday. The U.S. Department of Energy will release inventory data later Wednesday.

"The API numbers were quite supportive as gasoline supplies have come down, but risks continue to be on the economic front," said Shum.

ECONOMIC OUTLOOK

Concerns about the debt crisis have weighed on oil markets in recent weeks, adding to worries about weak U.S. economic data that could hit fuel demand.

The euro zone economy slowed sharply in the second quarter, hobbled by sluggish growth in Germany and stagnation in France, raising fears of a longer-term dip.

There was more upbeat data out of the U.S., with industrial output at the world's top oil consumer recording its best gain in seven months in July.

Also boosting sentiment were comments by China's top state planner Wednesday that the world's second-largest economy is expected to expand by 7 percent annually over the next five years.

Brent crude may end its rebound at around $109.57 a barrel, while U.S. oil is unlikely to reach $90 per barrel as it faces a strong resistance at $88.17, Reuters technical analyst Wang Tao said.

The conflict in Libya and Syria could further disrupt supplies and support oil prices, analysts said.

"The scale of disruption to Syrian oil production remains unclear, but Syria is reportedly importing gasoline from companies operating in the Mediterranean despite the existing sanctions," said analysts at J.P. Morgan in a report on Tuesday.

"As highlighted by recent statements by the US, even tougher sanctions may be required to limit Syria's ability to participate in the oil market."

(Editing by Michael Urquhart)

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