PARIS, May 7 (Reuters) - European wheat touched a more than two-month low on Thursday before paring some of its losses, following trends in crude oil prices with additional pressure from welcome rainfall in both the U.S. and Europe.

Benchmark September milling wheat BL2U6 on Paris-based Euronext, closed at 206.00 euros ($242.34) a metric ton, down 0.7%, after hitting its lowest level since April 20 in earlier trade.

Friday is a public holiday in France but Euronext commodities futures markets will be open.

"Oil prices keep weighing but the market is also keeping an eye on crops," a French trader said.

Oil prices fell 3% on Thursday, keeping Brent below $100 a barrel on hopes that a U.S.-Iran peace deal could bring a gradual reopening of the Strait of Hormuz. O/R

Ratings of French soft wheat crops showed 80% were in good or excellent condition by May 4, down from 81% a week earlier and up from 74% a year ago, farm office FranceAgriMer said on Thursday.

Rainfall this week in France and Germany, the European Union's two largest wheat producers, eased concern about dry weather damage for now.

Algeria's purchase of milling wheat in an international tender on Wednesday was on Thursday estimated at between 390,000 and 420,000 metric tons, the same as on Wednesday evening.

The purchase failed to fire up the market, with French wheat de-facto excluded for diplomatic reasons and with the Black Sea, especially Romania and Bulgaria, expected to be supplied. Trader talk was also of some Ukrainian wheat being bought.

But Algeria’s purchase was comparatively small, with importers generally delaying purchases in the hope an Iran peace deal will push commodity prices down sharply.

"The poor political relations between France and Algeria keeping French wheat out of Algerian tenders is disappointing as on price French wheat would have had a good chance of being supplied in the tender,” a German trader said. “The euro's strength is also a disappointment for EU export sales.”

French, Russian and Ukrainian 11.5% protein wheat prices were similar at around $232 to $234 a ton FOB for June shipment with Romanian about $8-$10 higher, traders said.

In overall generally thin export demand, Asian interest including from Indonesia was seen for Black Sea region wheat for May/June shipment, especially Ukrainian.

Italian buyers were also seeking around 10,000 tons of Black Sea feed wheat at about $255 a ton cost and freight included (c&f) for August shipment.

Prices at 1641 GMT
	Last	Change	Pct Move
Paris wheat BL2U6	206.00	-1.50	-0.72
Paris maize EMAc1	215.00	-2.75	-1.26
Paris rapeseed COMc1	509.75	-7.00	-1.35
CBOT wheat Wv1	611.25	-6.00	-0.97
CBOT corn Cv1	466.00	-2.50	-0.53
CBOT soy Sv1	1191.25	-3.50	-0.29
Euro/dlr EUR=	1.18	0.00	0.13
Most active contracts - Wheat, corn and soy US cents/bushel, Paris futures in euros per tonne