Oil, reeling from 3-day rout, bounces back to $73

SINGAPORE, July 20 (Reuters) Oil prices bounced back above a barrel on Thursday, with traders taking pause after an unexpected build in U.S. crude and gasoline inventories extended a steep slump from last week's record high.

U.S. light crude for August delivery rose 46 cents to .12 a barrel by 0222 GMT, attempting to end a three-day slide that has wiped more than 5 percent off prices. London Brent crude for September climbed 35 cents to .25.

Oil tumbled 88 cents on Wednesday after government data showed inventories of gasoline rose by 1.5 million barrels and crude stocks climbed 0.2 million barrels due to strong imports, counter to expectations of a decline in supplies.

But the data also showed that four-week average U.S.

gasoline demand, which accounts for more than a tenth of the world's total consumption of oil, had risen 1.9 percent from a year ago.

''Follow-through price action should be bullish, due to strong gasoline demand of 9.6 mb/d over the last four weeks,'' Calyon investment bank energy analyst Mike Wittner said in a note.

But he warned that fundamentals may be overwhelmed by the downward momentum of the steep profit-taking decline from Friday's record .40 a barrel, as a fear premium caused by flaring violence between Israel and Hizbollah dissipated.

''This correction from a geopolitical spike may overwhelm continued strong fundamentals in the very near-term,'' he said.

Dozens of Israeli warplanes pounded Lebanon on Thursday, a day after 63 civilians were killed in the deadliest toll of the nine-day conflict that has unnerved markets.

There was no sign that Israel or its Lebanese Shi-ite foes were ready to stop the violence, but also no indication that the violence would engulf oil-producing neighbours or affect exports from Syria or Iran, both supporters of Hizbollah.

Oil, which moved in lockstep with tumbling metals prices earlier this week as investors fled the whole complex, diverged on Wednesday when gold and other commodities rallied on signals of a possible pause in the U.S. interest-rate rise cycle.

Federal Reserve Chairman Ben Bernanke told the Senate Banking Committee that while the U.S. economy still faced inflation risks, cooler growth should curb price pressures over time.

OPEC President Edmund Daukoru said that current price levels posed a threat to the world economy, but a price in the mid-60-dollar range would be more acceptable.

REUTERS YA HS0811