Brent crude oil fell below $109 a barrel on Monday as refineries along the US East Coast wound down operations ahead of the approach of Hurricane Sandy, reducing crude use in the world's largest oil consumer.

The second-largest refinery on the US East Coast began shutting down on Sunday and three other plants cut output as the storm, which forecasters say could be the largest ever to hit the US mainland, threatened power outages and a massive storm surge across the region.

Brent futures for December dropped $1.04 to a low of $108.51, before recovering slightly to around $108.90 by 0900 GMT. Brent posted a 0.5 percent loss last week.

US crude was down 78 cents at $85.50. "With refineries cutting runs, we're likely to see a build-up in crude stocks which could be driving bearish prices at the moment," said Michael Creed, an economist at National Australia Bank in Melbourne.

Oil also came under pressure from falling stock markets as investors focused on weak corporate earnings.

The FTSE Eurofirst 300 index index of top European shares followed Asian markets lower, dropping 0.2 per cent in early trade.
London's FTSE 100, Paris's CAC-40 and Frankfurt's DAX opened down between 0.3 and 0.7 per cent.

The euro fell 0.3 per cent to $1.2890, at the lower end of its recent broad range between $1.28 and $1.31, waiting for bailout prospects for Spain and Greece to become clear.

"It is a risk off day," said Eugen Weinberg, head of commodities research at Germany's Commerzbbank in Frankfurt.

"Risk aversion is rising in all markets and investors are increasingly focusing on slow global economic growth," he added.-Reuters