* Dollar gains versus the euro after weak German data
* Oil prices slide $2 a barrel after near-10 pct gain
* European equities slip, copper, nickel weaken
(Recasts, adds comment, changes dateline, pvs SINGAPORE)
By Jan Harvey
LONDON, Nov 25 (Reuters) - Gold fell 2 percent in Europe on
Tuesday as a firmer dollar and softer oil prices prompted profit
taking after the previous session's near six-week highs.
Spot gold <XAU=> was at $807.00/809.00 an ounce at 1056 GMT,
down from $819.55 an ounce in New York late on Monday. Earlier
it touched a session low of $801.80.
The precious metal posted its biggest two-day gain since
early 2000 that session as the dollar tumbled, with risk
aversion easing after the U.S. government agreed to inject $20
billion to rescue Citigroup <C.N>.
The rally in commodities and stocks which followed pulled
gold in its wake, but as the dollar recovers a touch on Tuesday
and oil prices slip after gaining 10 percent in two days, the
precious metal is easing.
"We have seen some really strong gains over the last few
days," BNP Paribas analyst Michael Widmer said.
"Yesterday there were gains across most asset classes, as
there was some relief over the news on Citigroup, and gold
benefitted from that as well. So far this morning, we are seeing
a bit of profit taking."
A recovery in the dollar versus the euro is prompting some
of this selling, analysts said. Gold is often bought as an
alternative asset to the U.S. currency and tends to move in the
opposite direction to it.
The dollar firmed more than half a percent against the
single currency in early trade, off a two-week low it hit on
Monday. []
Other asset prices also gave up gains, weighing on gold.
European stocks slipped after mining giant BHP Billiton <BLT.L>
said it was dropping its bid for rival Rio Tinto <RIO.L>
[], and metals such as copper and nickel dipped.
Oil prices also fell, with U.S. crude futures shedding more
than $2 a barrel in early European trade after Monday's near 10
percent rally. []
Gold typically moves in line with crude prices, as it is
often bought as a hedge against oil-led inflation.
OUTLOOK SUPPORTS
But while gold is slipping for the moment, analysts are
confident that with interest rates easing around the world and
the economic outlook uncertain, the precious metal will continue
to be supported.
"Gold's rally seems to be overextended and profit taking or
slight reversal is necessary (for it) to continue its uptrend,"
Pradeep Unni at Richcomm Global Services said.
"However, as long as it stays above $776, gold would be
bullish," he added.
Among other precious metals, spot silver <XAG=> tracked gold
lower to $10.33/10.41 an ounce, against $10.47 in New York late
on Monday.
Spot platinum <XPT=> slipped to $845/865 an ounce from $856,
while its sister metal palladium <XPD=> was little changed at
$191/199 an ounce against $190.50.
Both platinum group metals have suffered from fears over
falling demand from the automotive sector, which accounts for
around half of global platinum and palladium consumption.
However, lower prices are causing producers to scale back
output of the metals, potentially supporting prices, analysts
said.
"More and more mining companies are adjusting their
production to the current market situation and are thereby
contributing to a potential medium-term scarcity of metal and...
higher prices," precious metals group Heraeus said in a weekly
note.
For a FACTBOX on miners cutting output and halting plans to
bring new mines on stream, click on []
(Reporting by Jan Harvey; editing by Sue Thomas)
