* Concern lingers over outlook for some euro zone economies
* Euro-priced gold hits record high at 817.59 euros/oz
* Oil prices jump above $75/bbl on weak dollar, Iran
(Updates prices, adds comment)
By Jan Harvey
LONDON, Feb 16 (Reuters) - Gold prices rose more than 1
percent in Europe on Tuesday as investors bought the metal to
hedge against financial risk in the euro zone, and as the euro
regained some lost ground versus the dollar.
Lingering concerns over the outlook for peripheral euro zone
economies, most notably Greece, helped send gold priced in euros
<XAUEUR=R> to a record high at 817.59 euros an ounce.
Spot gold <XAU=> was bid at $1,114.70 an ounce at 1325 GMT,
against $1,100.50 late in New York on Monday. U.S. gold futures
for April delivery <GCJ0> on the COMEX division of the New York
Mercantile Exchange rose $26.00 to $1,115.50 an ounce.
Gold prices have risen steadily this week as investors
concerned by the fiscal health of a number of smaller euro zone
countries, including Greece, Portugal and Spain, bought the
metal as a hedge against currency market instability.
"Over the last week or so we've had this traditional (link)
between the dollar and gold disconnecting, so you have seen the
dollar strengthen and gold strengthen," said Jeremy East, global
head of commodity derivatives trading at Standard Chartered.
"The situation in Greece has contributed to that."
Such fears, and persistent weakness in the single currency,
pushed euro-priced gold to record highs on Tuesday. For a
graphic of various commodities' performance in euro terms, click
on: http://graphics.thomsonreuters.com/0210/CMD_EUR0210.gif
"Alongside long-term inflation fears, looming risks in the
euro zone are obviously driving investors into gold, with Greece
remaining the dominating theme," said Commerzbank in a note.
"Greece's public-debt crisis, remaining a sword of Damocles,
will drive investors to view gold as a safe haven again."
The bank added that the outcome of a two-day meeting of euro
zone finance ministers in Brussels, which is due to conclude on
Tuesday, was being closely eyed by the market. []
EURO REBOUNDS
"International financial contagion remains a risk and the
cost of insuring sovereign debt is rising for all countries
internationally," said bullion trader GoldCore in a note.
"As long as there remains the risk of the ignition of what
is being called the global debt time bomb, it is hard to see how
gold will not remain in strong demand."
Gold prices also benefited from a rebound in the euro on
Tuesday, with the single currency recovering some recent losses
as investors took profits after concluding much of the bad news
on Greece's public finances was reflected in the market. []
However, the euro remains vulnerable to further losses,
traders said.
As well as euro-denominated gold, gold priced in sterling
<XAUGBP=R> and South African rand <XAUZAR=R> also rose to
one-month highs. Gold's current performance in dollar terms does
not reflect the precious metal's true strength, analysts said.
"It is important to concentrate not only on the dollar price
(of gold)," said VM Group analyst Matthew Turner. "Currently
$1,100 is much lower than it has been, but if you look in euros
that is not so true."
Among other commodities, oil prices rallied 1.7 percent to
above $75 per barrel on Tuesday, responding to the euro's gains
against the dollar and supported by tensions over pressure for
more sanctions against Iran. []
Elsewhere, holdings of the world's largest gold-backed
exchange-traded fund, New York's SPDR Gold Trust <GLD>, were
steady on Monday, while gold demand in India, traditionally the
world's biggest consumer, retreated. [] []
Among other precious metals, silver <XAG=> was at $15.75 an
ounce versus $15.52, platinum <XPT=> at $1,530 an ounce versus
$1,512.50 and palladium <XPD=> at $427.50 versus $418.50.
(Reporting by Jan Harvey; Editing by Keiron Henderson)
