* Brent rises above $104, climbs for a second day
* Oil set for second month of decline
* China Sept PMI steady, firmer than flash estimate-HSBC
* OPEC output to increase in September - Reuters survey
* Coming Up: U.S. personal income Aug 2011; 1230 GMT (Updates prices)
By Jane Lee
SINGAPORE, Sept 30 (Reuters) - Brent crude edged above $104 a barrel on Friday, but remains on track for the biggest quarterly drop in 15 months on concerns that a slowing global economy will undercut fuel demand.
U.S. jobless benefits claims declined and German lawmakers approved a euro zone bailout fund with greater powers, easing some of the worries about developed economies. But Asian stocks continued a downward march to their worst performance since October 2008 on fears that Europe's debt crisis will infect the world.
ICE Brent
U.S. crude
"Crude oil has been holding up quite well compared with the other asset classes such as equities," said Ker Chung Yang, a commodities analyst at Phillip Futures in Singapore, who forecasts U.S. crude will be between $80 and $90 by the end of this year. Prices ended at $91.38 a barrel in 2010.
"Sentiment is negative on the macroeconomic front but demand is still there, especially coming from the emerging markets, from China and India."
U.S. weekly jobless benefits claims fell to a five-month low while revised data showed second-quarter GDP grew slightly more than expected.
Germany's parliament overwhelmingly approved a plan agreed in July to expand the euro zone's bailout fund.
Sentiment was also lifted by an index that showed China's factory activity in September almost unchanged from the previous month, and stronger than earlier estimates.
The HSBC purchasing managers' index (PMI), which looks at business conditions in a range of industries, was at 49.9 in September, unchanged from August, the bank said on Friday.
The final reading for HSBC's China PMI is stronger than the flash PMI reading of 49.4 published last week.
Brent is expected to fall back to the previous trading session's low of $102.35 as indicated by its wave pattern and a Fibonacci retracement analysis, according to Reuters market analyst Wang Tao.
PRICE FORECASTS
Morgan Stanley this week cut its 2012 average Brent price target, citing the prospect of returning supply amidst a weaker demand outlook. The bank lowered its outlook for the average Brent price to $100 a barrel next year from $130.
Non-OPEC supply was seen growing, largely because of Libyan restarts, Morgan Stanley said.
OPEC oil output is expected to rise in September to its highest level in almost three years due to a jump in exports from Iraq and the restart of supplies from Libya, a Reuters survey found on Thursday.
Supply from all 12 members of the Organization of the Petroleum Exporting Countries is forecast to average 30.25 million barrels a day this month, up from 30.15 million in August, the survey of sources at oil companies, OPEC officials and analysts found.
Libya's output, which fell to almost nothing due to the civil war, has begun to recover, the survey found. The country exported one small crude cargo on Sept. 25 and, sources say, is sending some oil to refineries. (Additional reporting by Francis Kan; Editing by Clarence Fernandez)