* China manufacturing PMI rises to seven-month high * API reports U.S. crude inventories fell * Coming Up: US EIA oil inventory report; 1530 GMT (Previous SINGAPORE, updates prices, adds quote in para 3) LONDON, Dec 1 - Oil rose towards $85 a barrel on Wednesday as rising factory output in China and a report saying U.S. inventories declined countered lingering concern about Europe's debt problems. China's official purchasing managers' index (PMI) climbed to a seven-month high in November. Industry group the American Petroleum Institute said crude inventories fell more than expected. "We had some vaguely helpful API figures in that the crude stocks fell and there was some bullish statistics from China," said Christopher Bellew, a broker at Bache Commodities. U.S. crude for January gained 82 cents to $84.93 a barrel by 0924 GMT, after tumbling almost 2 percent on Tuesday. Brent crude was up 84 cents at $86.76. Oil in New York posted its third straight monthly gain in November when it rose more than 3 percent. During the month it also touched a 25-month high of $88.63. U.S. crude inventories fell by 1.1 million barrels in the week through Nov. 26, the American Petroleum Institute (API) reported on Tuesday, compared with expectations for a 900,000-barrel decline. Inventories of distillates including heating oil and diesel unexpectedly rose by 224,000 barrels and gasoline stockpiles rose 1.1 million barrels, more than forecast. Investors will be looking to the U.S. Energy Information Administration's weekly supply report due at 1530 GMT for confirmation of the inventory changes in the world's top oil consumer. The euro inched up on Wednesday but remained near an 11-week low against the dollar as investors waited to see what European policymakers will do next to contain worries about euro zone debt. Oil and dollar-denominated commodities often move inversely to the dollar. Analysts said the market was looking for more pre-emptive action by policymakers after a rescue package for Ireland as pressure in the euro zone bond market was widening to more countries including Belgium. reported on Tuesday, compared with expectations for a 900,000-barrel decline. Inventories of distillates including heating oil and diesel unexpectedly rose by 224,000 barrels and gasoline stockpiles rose 1.1 million barrels, more than forecast. Investors will be looking to the U.S. Energy Information Administration's weekly supply report due at 1530 GMT for confirmation of the inventory changes in the world's top oil consumer. The euro inched up on Wednesday but remained near an 11-week low against the dollar as investors waited to see what European policymakers will do next to contain worries about euro zone debt. Oil and dollar-denominated commodities often move inversely to the dollar. Analysts said the market was looking for more pre-emptive action by policymakers after a rescue package for Ireland as pressure in the euro zone bond market was widening to more countries including Belgium. (Reporting by Alejandro Barbajosa and Alex Lawler; Editing by Alison Birrane

Source