UPDATE 6-Brent edges up as Bernanke view weighs on dollar

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* Oil tries to extend gains after 1.5 pct rise Friday

* Coming up: API oil data 4:30 p.m. EDT Tuesday (Recasts, updates prices, market activity)

By Robert Gibbons

NEW YORK, March 26 (Reuters) - Brent crude prices edged up o n M onday as the dollar weakened after comments from U.S. Federal Reserve Chairman Ben Bernanke reinforced expectations interest rates will be kept low.

An unexpected improvement in German business sentiment, rising a fifth straight month in March, also lent support to oil prices even as ongoing concerns about the larger euro zone economy limited the effect.

While Iran's dispute with the West over Tehran's nuclear program remained supportive, investors may require more headlines to further stoke oil's geopolitical fear premium.

"The Bernanke comments and the overnight German confidence reading were on the plus side, but without further Iran/N. Korea jitters, the positive economic news is more than priced in," said John Kilduff, partner at Again Capital LLC.

Brent crude edged up 16 cents to $125.29 a barrel at 1:12 p.m. EDT (1712 GMT), having fallen to $124.58, just above the 20-day moving average of $124.45, and having reached $125.89.

U.S.

"EDT Tuesday (Recasts, updates prices, market activity)By Robert GibbonsNEW YORK, March 26 (Reuters) - Brent crude prices edged up o n M onday as the dollar weakened after comments from U.S"crude was unchanged at $106.87 a barrel, having seen tug-of-war trading from $106.19 and $107.32.

The intraday lows tested below the U.S. crude 10-day moving average at $106.45 and the 20-day MA at $106.58.

"The petroleum markets are in positive territory, but we'd say somewhat less buoyant than the gains in the S&P 500, suggesting that there is still some consolidation of Friday's gains underway," Tim Evans, energy analyst for Citi Futures Perspective, said in a note.

On Friday, both Brent and U.S. crude rallied more than 1 percent, as details emerged of the first sizeable drop in Iran's oil exports as some buyers stopped or scaled back purchases to avoid Western sanctions.

BERNANKE WITH A VIEW

The U.S. economy must grow more quickly if it is to produce enough jobs to lower the unemployment rate, Bernanke told the National Association for Business Economics, tamping down expectations of a quick reversal of monetary easing.

The euro hit its highest against the dollar in three weeks while the U.S. currency slid to a three-week low against the Swiss franc and the dollar index weakened.

An unexpected drop in U.S.

pending home sales in February also weighed on the dollar, but also helped hem in oil prices.

U.S. stocks rose on Bernanke's comments suggesting the central bank will keep monetary policy supportive even as the unemployment rate falls.

INTERNATIONAL TENSIONS

European Union sanctions on Iran crude oil exports were slated to be enforced July 1.

But Iran's exports appeared to have fallen in March by around 300,000 barrels per day, or 14 percent, according to estimates from industry consultant Petrologistics and an oil company.

Developments in South Sudan helped limit oil's price rise on Monday. On Saturday, South Sudan said it hoped to resolve a dispute over oil and other outstanding issues with Sudan within a month or two. The dispute led to 350,000 barrels per day of production being shut in from January.

U.S. President Barack Obama told his Chinese counterpart, Hu Jintao, the United States was open to starting dialogue with North Korea, but only if it meets international commitments, a senior White House aide said.

North Korea's plan for a long-range rocket launch next month has added to geopolitical uncertainty.

(Additional reporting by Zaida Espana and Simon Falush in London and Florence Tan in Singapore; Editing by David Gregorio)

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