* Concern lingers over euro zone debt levels
* Markets await outcome of EU leaders' summit in Brussels
* Gold-silver ratio lifts from two-week low
* Coming up: U.S. May CPI, core CPI data at 1230 GMT
(Updates, adds comment, changes dateline from SINGAPORE)
By Jan Harvey
LONDON, June 17 (Reuters) - Gold rose above $1,230 an ounce
in Europe on Thursday as investors bought the metal as a haven
due to concerns over euro zone sovereign debt, with investors
awaiting the outcome of a European Union summit in Brussels.
The metal retreated from highs near $1,235 an ounce,
however, as stock maRkets and the euro pared early losses.
Spot gold <XAU=> was bid at $1,231.35 an ounce at 0854 GMT,
against $1,229.60 late in New York on Wednesday. U.S. gold
futures for August delivery <GCQ0> rose $2.60 to $1,233.10.
Gold has risen as much as 14 percent since the start of the
year, spiking to a record high at $1,251.20 an ounce last week
alongside concerns sovereign debt issues will damage the euro.
"Many people missed it to buy, as it was moving up too
fast," Commerzbank senior trader Michael Kempinski said.
"Physical demand slowed down, but people are buying the dip. I'm
quite optimistic for gold, especially gold in euros."
Kempinski said the precious metal was being bought as an
alternative to all paper currencies.
Concerns over the outlook for some debt-laden euro zone
economies is lingering, with the premium investors demand to
hold 10-year Spanish government bonds rather than benchmark
German bunds hitting a lifetime euro high on Thursday. []
"Uncertainty still looms over the euro zone sovereign debt
issues," said VTB Capital's Andrey Kryuchenkov in a note.
The euro <EUR=> recovered after easing versus the dollar in
early trade on concerns about Spain's public finances and
banking system, hitting a three-week high after a well-covered
Spanish bond auction eased some of those fears. []
Meanwhile, European shares reversed early losses to climb as
shares in BP surged after it agreed to set up a $20 billion
spill fund. Asian markets had been softer overnight. []
Industrial commodities weakened, with copper and nickel
falling more than 2 percent and oil sliding as the pace of
demand growth was questioned following mixed economic and
inventory data from top consumer the United States. []
EU SUMMIT, U.S. INFLATION DATA EYED
The markets are awaiting a raft of U.S. economic data due
later in the session, including the May consumer price index
reading and May real earnings numbers at 1230 GMT.
They are also eyeing the outcome of a summit of European
Union leaders in Brussels on Thursday, at which economic
governance will be discussed. []
"We will prepare for the G20 and G8 meetings so that we can
go with as united a European position as possible that also
covers a bank levy and the taxation of financial markets," said
German Chancellor Angela Merkel ahead of the meeting.
Interest in physical gold as an investment product kept
holdings of the world's largest gold-backed exchange-traded
fund, New York's SPDR Gold Trust <GLD>, at a record above 1,306
tonnes on Wednesday.
Among other precious metals, silver <XAG=> was bid at $18.39
an ounce against $18.40.
The ratio of gold to silver, or the number of ounces of
silver needed to buy an ounce of gold, rose to above 67 from the
two-week low of 66.7 it hit in the previous session as silver
succumbed to weakness in other industrial metals.
While it is often seen as an investment metal, as a cheaper
alternative to gold, silver is primarily industrial in use.
Elsewhere platinum <XPT=> was at $1,565.50 an ounce against
$1,566.50, while palladium <XPD=> was at $467.73 against $471.
"Both have run into profit taking this morning as a result
of the weaker tone in industrial metals, although clearance of
chart resistance at $1,572/$471 this week could draw dip buying
interest," said James Moore, an analyst at TheBullionDesk.com,
in a note.
(Reporting by Jan Harvey; Editing by Alison Birrane)
