* China announces $600 bln stimulus plan; G20 meet in Brazil
* Oil rises, industrial metals surge, dragging gold higher
* Dollar weakens against euro as risk appetite improves
(Updates prices, adds comment)
By Jan Harvey
LONDON, Nov 10 (Reuters) - Gold rose more than 4 percent in
Europe on Monday as dollar weakness and sharp gains across
commodities as an asset class sharpened appetite for the
precious metal.
A near $600 billion economic stimulus package announced by
China on Sunday helped allay risk aversion and fuelled gains in
equities as well as oil and base metals, carrying gold higher.
Spot gold <XAU=> hit a peak of $767.80 an ounce, before
easing back to $763.80/753.80 by 1352 GMT, against $735.95 late
in New York on Friday.
"The weakness in the U.S. dollar... and the rise in crude
oil and industrial metals reflect the announcement made by
Chinese government yesterday for a stimulus package of roughly
$568 billion," said Dresdner Kleinwort consultant Peter Fertig.
"This should spur investment in housing and infrastructure
in the next two years, which will (lead to) stronger demand for
energy and base metals. This is also a supportive factor for
gold."
China launched its stimulus plan on Sunday, pledging nearly
$600 billion in extra spending by the end of 2010.
[]
Base metals jumped in response to the plan, with copper
surging nearly 10 percent, nickel 13 percent and zinc around 7
percent following the news. All the metals have lost substantial
ground in recent months. []
Oil also rallied more than 5 percent after Saudi Arabia said
it will cut supply to Asia and on hopes global efforts to
stimulate growth could underpin demand. []
At a G20 meeting in Brazil, finance ministers and central
bankers representing 90 percent of the world's economy said they
will take "all necessary measures" to normalise the financial
markets and counter the backlash to the credit crisis.
[]
DOLLAR WEAKENS
The dollar weakened against the euro as risk appetite
improved. A recovery in the stock markets prompted investors to
move into higher-yielding currencies such as the euro and the
yen. []
A weaker dollar tends to benefit gold, which is often bought
as a hedge against weakness in the U.S. currency.
Among other precious metals, silver <XAG=> tracked gold
higher to a peak of $10.51 an ounce, up 5 percent, before
settling back to $10.41/10.51 an ounce from $9.99.
Platinum prices climbed more than 3 percent as fears abated
that the demand picture for industrial precious metals will
continue to worsen.
The white metal is also being helped by fresh fears over
supply after major producer Anglo Platinum <AMSJ.J> said last
week it may lose up to 200,000 ounces of output this year due to
a smelter shut-down.
However, all the platinum group metals remain well off highs
after posting sharp losses in recent months on waning demand
from carmakers, which account for more than 50 percent of PGMs
consumption.
"The poor automotive market points towards platinum's rally
losing momentum in the $880-$900 an ounce area," said JP Morgan
analyst Michael Jansen in a research note.
Platinum <XPT=> rose to a high of $877.50 an ounce, before
easing back to $875.50/895.50, against $845. Its sister metal
palladium <XPD=> was at $225.50/233.50 an ounce against $220.
(Editing by James Jukwey)
