* U.S. bank rescue plan disappoints
* SPDR ETF holdings rise to fresh record
(Updates throughout, changes dateline, pvs SINGAPORE)
By Jan Harvey
LONDON, Feb 11 (Reuters) - Gold rose in Europe on Wednesday,
reversing earlier losses, as disappointment with the U.S. bank
rescue plan prompted investors to seek out assets such as
bullion-backed exchange-traded funds as a haven from risk.
The United States on Tuesday rolled out a revamped bank
rescue plan that may cost more than $2 trillion. Stocks slid by
the most in two months after the plan was unveiled, while oil
and currency markets reacted with scepticism and gold climbed
more than 2 percent as investors sought safety.
It extended those gains to a session high of $921.90 on
Wednesday, after falling briefly overnight in Asia as investors
took profits.
At 1016 GMT it was quoted at $920.70/922.70 an ounce,
against $914.15 late on Tuesday.
"There has been a lot of ETF demand," said Simon Weeks,
director of precious metals at the Bank of Nova Scotia.
"That doesn't seem at all price sensitive or sensitive to
where we are in technical terms. (Buyers) just want the
safe-haven opportunity. As long as that carries on, the market
is going to be very well supported," he added.
Holdings of the world's largest bullion-backed ETF, the SPDR
Gold Trust <GLD>, rose to a record 894.72 tonnes on Feb. 10, up
12.85 tonnes from the previous day.
Strong sales of gold for ETFs, plus coins and bars, are
helping to make up for weak jewellery sales in traditionally key
bullion markets like India, China and the Middle East.
Indian gold buying eased as prices rose after showing some
signs of recovery as the metal slipped earlier this week.
"Buying would only come if prices slide below $900 levels,"
a dealer with a state-run bank in Mumbai said. []
Gold's main external driver, the dollar, weakened a touch
against the euro, giving up some gains made in the previous
session as dealers digested the implications of the U.S. recue
plan. []
A softer dollar typically benefits gold, which is often
bought as a hedge against weakness in the U.S. currency.
EQUITIES SLIP
Among other assets, equities slipped in Europe, joining a
global stock sell-off as investors feared the U.S. bank rescue
plan would not be enough to prop up the troubled financial
system. []
Oil prices were at nearly $38 a barrel, recovering some of
the previous session's 5 percent losses, after preliminary data
showed U.S. crude stocks fell unexpectedly last week.
[]
Markets will be eyeing further U.S. economic data due later
in the session for clues as to the next direction of trade. The
January Federal Budget is due for release at 1900 GMT, while
December international trade numbers are expected at 1330 GMT.
Spot silver <XAG=> rose to $13.33/13.41 an ounce from
$13.10.
Silver has also benefited from ETF inflows. Holdings of the
largest silver-backed ETF, the iShares Silver Trust <SLV>, rose
1 percent or nearly 77 tonnes to a record 7,606.89 tonnes on
Monday.
Among other precious metals, platinum <XPT=> extended
Tuesday's gains to $1,055/1,060 an ounce from $1,032, while
palladium <XPD=> was up at $210.50/215.50 an ounce from $210.
Platinum has risen 6 percent since early Tuesday on the back
of hopes there may be light at the end of the tunnel for the
global economy, and as platinum miners reported operational
cutbacks.
"Momentum signals are warning of downside potential today,"
Standard Bank analyst Manqoba Madinane said, however.
Chinese passenger car sales fell 7.76 percent in January
year-on-year, official data showed on Tuesday. Platinum and
palladium, which are used as components in catalytic converters,
are highly sensitive to car demand. []
(Editing by Sue Thomas)
