* Euro zone debt levels still in focus
* 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 prices)
By Jan Harvey
LONDON, June 17 (Reuters) - Gold rose to $1,235 an ounce in
Europe on Thursday, benefitting from concern over euro zone
sovereign debt and its impact on the wider economy, which
prompted investors to cut their exposure to riskier assets.
Spot gold <XAU=> was bid at $1,235.75 an ounce at 1136 GMT,
against $1,229.60 late in New York on Wednesday. U.S. gold
futures for August delivery <GCQ0> rose $6.60 to $1,237.10.
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 investors were buying gold as an alternative
to all paper currencies.
The concern investors have about some debt-laden euro zone
economies, such as Spain, has not receded.
The premium bond holders demand to own 10-year Spanish
government debt over benchmark German bunds hit a euro lifetime
high on Thursday, although an auction of Spanish 10-year bonds
attracted good demand. []
"Uncertainty still looms over the euro zone sovereign debt
issues," said VTB Capital's Andrey Kryuchenkov in a note.
The euro <EUR=> hit a three-week high against the dollar
after the Spanish auction soothed some fears about the country's
public finances. []
The auction also helped propel European shares towards their
seventh consecutive daily rise, driven by a rally in bank shares
and by BP <BP.L>, which said it would set up a $20 billion fund
for damage claims stemming from its Gulf of Mexico oil spill.
[]
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 $18.46
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 mainly used in industry.
Platinum <XPT=> was at $1,568.50 an ounce against $1,566.50,
while palladium <XPD=> was at $471.50 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.
(Additional reporting by Amanda Cooper; editing by Sue Thomas)
