SINGAPORE: Malaysian palm oil futures reversed early gains on Friday, tracking lower crude and as investors booked profits ahead of the weekend.

The benchmark palm oil contract for September delivery on the Bursa Malaysia Derivatives Exchange closed down 0.13% to 2,359 ringgit ($550.53) a tonne.

Oil fell below $43 a barrel as a resurgence of coronavirus cases raised concerns that fuel demand growth could stall.

Weaker crude makes palm a less attractive option for biodiesel feedstock.

Palm rose as much as 1.35% earlier in the session as China's factory activity picked up and job growth in the United States accelerated.

The contract was trading higher on improved US and Chinese manufacturing data amid looser movement restrictions, Marcello Cultrera, institutional sales manager at Phillip Futures in Kuala Lumpur told Reuters.

This would mean improvement in palm oil demand and an increase in re-stocking, he said.

The Caixin/Markit services Purchasing Managers' Index (PMI) for China on Friday showed its highest reading since April 2010, pulling further away from the trough hit in February as the coronavirus lockdown paralysed the country's economy.

Malaysia's massive palm oil industry has warned that the European Union's recent proposal to make its food industry more sustainable could eventually lead to stricter regulations for imports of the world's most-consumed vegetable oil.

Dalian's most-active soyoil contract rose 1.16% and its palm oil contract was up 1.49%.

Chicago Board of Trade (CBOT) soybean futures touched a three-month high overnight before pulling back on profit-taking, tempered by exports to China.

Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.