Oil dives 3.8 percent to 8-month low

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After Friday's passage of a landmark U.S. $700 billion (398 billion pound) bailout bill seemed to quell, for now, weeks of U.S.-centred turmoil, the focus shifted to Europe where officials scrambled at the weekend to save three banks and offered different ways to soothe the frayed nerves of investors and savers.

U.S. light crude for November delivery tumbled $3.39 a barrel or 3.6 percent to $90.49 by 8:11 a.m. British time, a fourth day of losses that deepened last week's 12 percent slump, the market's biggest such loss in almost four years. Earlier in the day, it fell 3.8 percent to as low as $90.27.

London Brent crude dropped $3.25 to $87.00 a barrel.

"There's a growing perception that the bailout package will put a further drag on U.S. growth, and that really this is just a Band-Aid initiative to bail out Wall Street," said Mark Pervan, senior commodities analyst at ANZ.

The U.S. dollar's rise to a 13-month high versus the euro added to pressure on beleaguered commodities, which slumped more than 10 percent last week in their biggest-ever weekly loss. Asian stocks tumbled by around 5 percent on Monday.

Oil demand in the world's top consumer has already slumped this year under the weight of record prices, while consumption in Japan and Europe has also weakened, knocking crude off a record peak over $147 a barrel struck in July.

Traders may begin to fear next for China, whose rapid growth helped trigger oil's rise from just $20 a barrel in 2002.

"I think the market's starting to build this into prices," said Pervan. "You would expect the market is now joining the dots and thinking ... this will probably flow through to China."

Though the United States bought breathing room in the credit crisis with a series of takeovers and bailouts, Europe fought at the weekend to contain the fallout.

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