Oil up in Asia but eurozone worries weigh

SINGAPORE: Oil prices rose in Asia Friday after overnight losses but analysts warned that waning hopes of decisive action from a key European Union summit would drag crude markets down again.

New York's main contract, light sweet crude for delivery in August rose 75 cents to $78.44 a barrel and Brent North Sea crude for August delivery gained 44 cents to $91.80.

Bargain-hunting traders were lifting crude prices but eurozone gloom was threatening the relief rally.

Spain and Italy refused to back a stimulus package that was to be launched in an EU summit in Brussels, insisting that immediate measures to bring down soaring borrowing costs be enacted before they pledged their support.

The strong-arm tactics threatened to derail the crucial two-day summit that began Thursday to launch the stimulus package and pave the way for deeper economic integration to prevent a eurozone breakup.

"The market has fallen quite a bit already so we may have a little bit of a relief rally," said Tony Nunan, risk manager for Mitsubishi Corp in Tokyo.

"But I think it's like a dead cat bounce type, it can come up a little bit but I think we're heading down," he told.

EU leaders were to meet again later Friday in a bid to find a compromise.

But Nunan said he was doubtful that they would be able to find a lasting solution to the eurozone's problems.