* Equity markets climb in Europe, Wall Street seen higher
* Bank of Japan says will buy government bonds
* Paulson & Co buys $1.3 billion stake in AngloGold Ashanti
(Updates throughout, changes dateline - pvs TOKYO)
By Jan Harvey
LONDON, March 18 (Reuters) - Gold eased in Europe on
Wednesday as equity markets climbed on the back of growing
confidence in a recovery in the financial sector, denting the
precious metal's appeal as a haven.
Spot gold <XAU=> eased to $909.40/910.40 an ounce at 1108
GMT from $914.20 late in New York on Tuesday.
"We are a bit softer on the back of (firmer) stocks in the
Far East, and Europe having a positive start," said Afshin
Nabavi, head of trading at MKS Finance. "This feels like the
calm before the storm."
Trade is expected to be relatively quiet ahead of the
conclusion of the U.S. Federal Reserve's two-day policy meeting
later in the session, he said.
The Fed is expected to renew its vow to do whatever is
necessary to pull the economy out of recession. It has also been
contemplating purchases of long-dated government debt to keep
interest rates low by expanding money supply. []
The Bank of Japan stepped up its outright purchases of
Japanese government bonds earlier on Wednesday, a move MF Global
analyst Tom Pawlicki said in a note could put pressure on gold.
"The yen correlates strongly with gold, and further yen
weakness could imply reduced need for safe-haven," he said.
Investors often borrow yen to invest in other higher
yielding, riskier assets.
Demand for gold as a safe store of value was also knocked
after better-than-expected U.S. and German economic data boosted
world stocks on Wednesday, with MSCI's all-country index
<.MIWD00000PUS> climbing 0.3 percent. []
Prices are also being pressured by the growing tide of scrap
metal returning to the market, as consumers are tempted to sell
old jewellery by high prices and pushed to raise cash by the
faltering economy. []
"Our conversations with scrap recyclers... lead us to
believe that high prices have triggered a significant increase
in recycling, particularly in India, the Middle East, and other
price-sensitive regions in recent months," said HSBC in a note.
STAKE
U.S. hedge fund Paulson & Co showed its confidence in the
gold sector with the purchase of a $1.3 billion stake in the
world's third largest gold miner, AngloGold Ashanti <AGLJ.J>,
from mining group Anglo American <AAL.L>. []
AngloGold, which focuses on South Africa, produced 4.982
million ounces of gold last year.
"The very fact that Paulson has made this move is going to
prompt other hedge fund to look at why, and what the merits of
following that with similar purchases are," said Fairfax analyst
John Meyer.
"AngloGold is deep-level, higher-cost, quite highly
leveraged gold mining, with good liquidity and good scale," he
said. "(Paulson) clearly feel that gold is going to strengthen."
Among other precious metals, spot silver <XAG=> eased a
touch to $12.60/12.66 an ounce from $12.70, tracking gold.
Spot platinum <XPT=> was steady at $1,045/1,053 an ounce
from $1,043.50, while spot palladium <XPD=> ticked up to
$193/198 an ounce from $191.50.
Both metals, which are primarily used in car manufacturing,
have shed more than 50 percent of their value in the last year
as automakers cut back production amid dwindling sales.
Germany's BMW <BMWG.DE> said on Wednesday car markets will
drop as much as 20 percent this year. []
(Reporting by Jan Harvey; Editing by Anthony Barker)
