* U.S. crude inventories fall unexpectedly-API
* China raises interest rate, fourth since October
* N. Africa, Middle East unrest remain supportive to oil
* Coming up: EIA inventory data, 1430 GMT
PERTH, April 6 (Reuters) - U.S. crude oil futures extended losses early Wednesday ahead of a government inventory report expected to show a rise in crude stockpiles, but persistent supply worries stemming from unrest in the Middle East and North Africa limited losses.
Brent crude also slipped, after touching a 2-1/2-year peak above $122 a barrel on Tuesday as geopolitical tensions more than offset China's latest interest rate hike.
Data from the American Petroleum Institute (API) showed U.S. crude inventories fell unexpectedly by 2.8 million barrels last week and gasoline stocks posted a surprise build.
The U.S. Energy Information Administration will release oil inventory data at 1430 GMT on Wednesday.
FUNDAMENTALS
* On the New York Mercantile Exchange, May crude was trading at $107.93 a barrel, down 41 cents, by 0106. Monday's close at $108.47 was the highest for front-month NYMEX crude since September 2008.
* In London, ICE Brent crude for May delivery was trading at $121.74 a barrel, down 48 cents. It climbed to $122.89 on Tuesday, the highest front-month price since August 2008.
* China's central bank increased interest rates on Tuesday for the fourth time since October, raising suspicions that data next week may show inflation rose more than expected in March. [ID:nSGE735004]
* Average U.S. gasoline demand dropped 1.2 percent week over week to 9.19 million barrels per day last week as pump prices rose, MasterCard Advisors' SpendingPulse report showed Tuesday.
* A tanker arrived at an east Libyan port to load the first crude cargo since unrest shut down exports in early March, with mystery surrounding the potential buyer of oil from the rebel-held territory. [ID:nLDE7342BL]
* NATO has been forced to change bombing tactics in Libya as Muammar Gaddafi's forces used civilians as human shields and hid armour in populated areas. [ID:nLDE7340IZ]
* Yemen's President Alli Abdullah Saleh urged his opponents to join talks in Saudi Arabia to try to end weeks of turmoil and violence. [ID:nLDE7340JH]
* Kuwait's emir asked the outgoing prime minister to form a new government after the cabinet resigned to avoid questions about unrest by Shi'ites in Bahrain. [ID:nLDE734172]
* Bahrain companies have fired hundreds of mostly Shi'ite Muslim workers who went on strike to support pro-democracy protests. [ID:nLDE73425B]
* Oil prices could leap to $200 to $300 a barrel if Saudi Arabia is hit by serious political unrest, former Saudi oil minister Sheikh Zaki Yamani told Reuters. [ID:nLDE7340MU]
* Oil companies operating in Gabon expect crude output to be back to normal within days after the oil employees' union agreed to end a four-day strike. [ID:nLDE7340MT]
MARKETS NEWS
* Japan's Nikkei average opened slightly higher on Wednesday at 9,668.11, but was seen stuck in a narrow range, with resource-related shares seen climbing on surging commodity prices and blue-chip exporters supported as the yen weakened against the dollar.
* The Japanese yen extended its decline early in Asia on Wednesday, hitting fresh 11-month lows against the euro and the Australian dollar and looking to deepen its losses as technical support levels threaten to give way.
* Gold firmed on Wednesday and held near a lifetime high hit in the previous session as inflation fears lingered after crude and corn rallied to new peaks, while silver edged down, having risen to its strongest level in more than three decades.
* Copper ended higher on Tuesday, after a much-anticipated rate hike in China failed to rattle the market, even as the metal-consuming giant's appetite for the metal has softened at the start of the year. (Reporting by Rebekah Kebede in PERTH, Gene Ramos and Robert Gibbons in NEW YORK; Editing by Himani Sarkar)