Oil fell to a one-week low after manufacturing in the euro area and China contracted this month, signaling that fuel consumption may decline.

Futures dropped as much as 2.6 percent after a European index based on a survey of purchasing managers slipped as German and French factory output unexpectedly shrank, according to London-based Markit Economics. A preliminary measure of Chinese industrial activity also decreased. Crude’s decline accelerated as equities retreated and the dollar climbed against the euro.

The preliminary index of Chinese manufacturing slid to 48.1 for March, the lowest level since November, and compares with a final 49.6 in February, according to HSBC Holdings Plc and Markit Economics. China is the world’s fastest-growing oil- consuming country.

French Industry Minister Eric Besson said yesterday that his country is “studying with its partners all possible options” to reduce oil prices including the release of supply from emergency reserves. The International Energy Agency coordinated the sale of 60 million barrels of crude and refined products in July and August as Libya’s output fell during the uprising against former leader Muammar Qaddafi.

Crude oil for May delivery fell to $104.50 a barrel on the New York Mercantile Exchange. Brent oil for May settlement declined $1.32, or 1.1 percent, to $122.88 a barrel on the London-based ICE Futures Europe exchange.

The price of gold fell to its lowest level since mid-January under pressure from a strong dollar.

The dollar strengthened against the euro after the unexpected message from Germany and France on the reduction of manufacturing activity in March for the first time this year.

Demand for physical markets in Asia is low after reports of slowing manufacturing activity in China in March.

India - the world's largest consumer of gold - jewelers do not work with this past weekend to protest against the increase of import duties on precious metals.

April futures price of gold on COMEX has fallen today to $ 1627.5 an ounce.