UPDATE 6-Oil falls as supply glut, demand worries offset equities gains

* Physical oil overhang remains in place, weighs on futures

* More upbeat equity markets supportive to oil

* British crude oil production to rise

(New throughout, updates prices and market activity; new byline, changes dateline, previously LONDON)

NEW YORK, Sept 9 (Reuters) - Oil prices fell on Wednesday as ample supply pressured futures even as the prospect of economic stimulus from China boosted equities markets.

U.S. shares seesawed after a stronger open, a more muted reaction after Europe's equities were buoyed by an 8 percent jump in Japanese stocks and the prospect of more stimulus from China.

Oil prices remained in retreat on concerns about swollen inventories, high global production and the increasing likelihood that Iranian barrels will return to export markets even as slowing growth in China threatens demand.

"The failure of oil markets to move higher on the back of this macroeconomic optimism calls fresh attention to the oil market's weak direct physical fundamentals," Tim Evans, energy futures specialist at Citi Futures, said in note.

Brent crude was down 88 cents at $48.64 a barrel at 12:19 p.m. EDT (1619 GMT), after climbing 4 percent in the previous session.

U.S. crude was off 67 cents at $45.27, having eased on Tuesday as trading resumed after the Monday's Labor Day holiday.

The U.S. summer driving season is ending. Gasoline demand in the United States has been supportive for oil prices at a time when the global demand picture is clouded by worries about China's economy.

The U.S. Energy Information Administration (EIA) cut its forecast for 2015 and 2016 world oil demand growth in its monthly report.

Traders awaited a fresh snapshot of U.S. oil inventories from industry and government, starting with American Petroleum Institute (API) data due at 4:30 p.m. EDT.

Analysts surveyed by Reuters on Tuesday expected crude stocks to be up slightly.

While Saudi Arabia's crude oil production dipped by 100,000 barrels per day (bpd) in August, the Organization of the Petroleum Exporting Countries continued to produce close to record volumes.

Russia and Mexico have indicated they will not cut production, cooling speculation that some producers might organize to lower output to support prices.

Britain's oil and gas industry association said the country's output is set to post a gain in 2015, the first in 15 years, reflecting investment in more efficient technology.

Oil prices are off more than 50 percent since June 2014 because of the global supply glut. In recent weeks, oil fell to 6-1/2-year lows before rallying in volatile trading after a stock market slide in China sent global equities and commodities prices tumbling.

(Additional reporting by Libby George in London and Henning Gloystein in Singapore; Editing by Jason Neely and David Goodman)

summary: NEW YORK, Sept 9- Oil prices fell on Wednesday as ample supply pressured futures even as the prospect of economic stimulus from China boosted equities markets. U.S. shares seesawed after a stronger open, a more muted reaction after Europe's equities were buoyed by an 8 percent jump in Japanese stocks and the prospect of more stimulus from China.

‘Secret’s out': Ronda Rousey confirms she’s in body paint in SI’s swimsuit issue

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summary: Somehow, this isn't about swimsuits.

Iraq Probes Mass Grave Site Found Near IS-Held Mosul

(BAGHDAD) — Iraqi investigators were probing a mass grave on Tuesday that was discovered the previous day by Iraqi troops advancing further into Islamic State-held territory near the city of Mosul.

The chilling find was the latest instance of mass graves being uncovered in territory wrested from ISIS militants. In Iraq and Syria so far, the group has killed thousands of people in summary executions and extrajudicial killings, the graves a dark testimony to its brutality.

Associated Press footage from the site shows bones and decomposed bodies among scraps of clothing and plastic bags dug out of the ground by a bulldozer after Iraqi troops noticed the strong smell while advancing into the town of Hamam al-Alil on Monday.

“Investigators flew in this morning and are on their way to the grave to conduct examinations and determine the cause of death,” said Cabinet official Haider Majeed, in charge of mass grave investigations.

The first officials at the site said the grave, behind an earthen embankment near an agricultural college, likely holds about 100 bodies, many of them decapitated. The town lies some 30 kilometers (19 miles) from Mosul.

It was unclear who the victims were, but a soldier at the site pulled a child’s stuffed animal from the scraps of clothing and rotting flesh, swarming with flies.

ISIS militants have carried out a series of massacres since seizing large swaths of southern and central Iraq in the summer of 2014, often documenting them with photos and videos circulated online.

The campaign to drive them from Mosul, Iraq’s second-largest city and the extremists’ last major urban stronghold in the country, began on Oct. 17.

Iraqi troops and the Kurdish peshmerga forces are now converging on Mosul, although the deepest advance into an eastern sliver of the city has stalled after militants counterattacked advancing special forces from within built-up, populated areas.

To the northeast, some 13 kilometers (8 miles) from the city, the peshmerga forces continued their push on the town of Bashiqa, believed to be largely deserted except for dozens of ISIS fighters.

Mortar fire, automatic weapons, and explosions rang out through the morning, as a thick plume of smoke hung over parts of the city, obscuring the view of aircraft.

summary:
Officials said the site could hold about 100 bodies