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SINGAPORE, Sep 4 (Reuters) Oil held steady on Monday after tumbling below $70 as dealers expected several weeks of inaction on Iran's nuclear dispute with the West.

U.S. light sweet crude rose 9 cents to $69.28 a barrel by 0719 GMT, after falling more than $1.00 on Friday. London Brent crude was up 11 cents at $69.26 a barrel.

The U.S. market was trading electronically on Monday, but the New York Mercantile Exchange (NYMEX) floor will be shut for the Labor Day holiday, keeping trade thin.

Oil prices slumped nearly 5 percent last week as the season's first hurricane proved a false alarm and U.S. oil inventories rose, but jitters over Iran kept losses in check.

Washington pressed for sanctions that oil traders fear could disrupt supplies from the world's fourth-largest exporter, but the European Union indicated it wanted more talks.

President Mahmoud Ahmadinejad told U.N. Secretary-General Kofi Annan on Sunday Iran wanted to find a negotiated solution to its nuclear dispute but would not freeze uranium enrichment ahead of any talks.

The European Union agreed on Saturday to give Iran two weeks to clarify its nuclear stance. The West fears it wants to build an atomic bomb, but Tehran says it only wants nuclear power.

EU foreign policy chief Javier Solana will meet Iran's chief nuclear negotiator, Ali Larijani, next week to try to clear up ambiguities in Tehran's reply to major powers' offer of broad cooperation if it stops the nuclear work.

''We're thinking the oil market might downgrade the risk further. A break below $68 would suggest that the downgrade is on,'' said Tobin Gorey, commodity strategist at Commonwealth Bank of Australia.

Prices also eased as weather risks appeared to recede, with the Colorado State University hurricane research team on Friday cutting its outlook for this year's Atlantic storm season to five hurricanes, four less than originally forecast back in May.

The sixth tropical depression of the 2006 season formed on Sunday between Africa and the Lesser Antilles, and could reach hurricane status by Thursday as it heads north of the Caribbean islands, the U.S. National Hurricane Centre said.

Other supply news was broadly positive over the weekend, offsetting last week's closure of 50,000 barrels per day (bpd) of Nigerian output, adding to the OPEC member's production woes.

In Iraq, the state oil marketer tendered to sell 6 million barrels of crude it had pumped to Turkey through a pipeline that has been mostly paralysed by sabotage for the past three years, and authorities said they had detained the second most senior al Qaeda figure in the country.

Russian oil production rose 0.9 percent to a record-high of 9.759 million bpd in August, largely thanks to the ExxonMobil-led Sakhalin-1 field ramping up output.

OPEC meets next week to chart output policy ahead of the winter, but is unlikely to change production even though that may mean it continues supplying the market more than demand, Iran's OPEC Governor Hossein Kazempour Ardebili said on Saturday.

REUTERS CS DS1543