* Risk appetite returns to markets on hopes for EU aid plan
* Stocks, industrial commods rise, "safe haven" assets fall
* Platinum Week enters second day in London
(Updates prices, adds comment)
By Jan Harvey
LONDON, May 18 (Reuters) - Gold fell on Tuesday and assets
seen as higher risk like stocks and industrial commodities rose
on hopes euro zone officials are making progress on a package of
measures to resolve the region's debt crisis.
Gold recovered from earlier lows below $1,210 an ounce,
however, as investors' interest remained piqued by the prospect
of further sovereign debt problems in the euro zone.
Spot gold <XAU=> was bid at $1,216.55 an ounce at 1422 GMT,
against $1,223.00 late in New York on Monday. U.S. gold futures
for June delivery <GCM0> on the COMEX division of the New York
Mercantile Exchange fell $11.10 to $1,217.00 an ounce.
Concerns that the fiscal problems of debt-laden Greece would
occur elsewhere in the euro zone drove gold to a record
$1,248.95 an ounce last week and knocked other assets.
But investors were cheered by news that aid for Greece was
arriving as planned, after officials said the country received a
14.5 billion euro emergency loan from the EU and would use some
of the money to repay an 8.5 billion euro bond. [].
"The fact that Greece has actually received some of the aid
package has probably taken some heat out of the market, but we
still have to see if the aid is a cure, or just a temporary
sticking plaster," said Societe Generale analyst David Wilson.
The 10-year Greek/German government bond yield spread
narrowed after the news and the cost of insuring against a Greek
default fell. []
The euro <EUR=> rose against the dollar as risk aversion
receded, while European shares climbed 1.5 percent and U.S.
equities rose at the open. [] [] []
Oil prices also recovered some of their recent losses to
climb nearly 3 percent as risk appetite returned, with dollar
weakness and strong Chinese demand helping prices rise.
Industrial metals also jumped. [] []
INVESTMENT FIRM
Investment demand for gold remained high, with holdings of
the world's largest gold-backed exchange-traded fund, New York's
SPDR Gold Trust <GLD>, rising just over three tonnes on Monday
to a record 1,217.108 tonnes. []
Among other precious metals, silver <XAG=> rose to $18.96
from $18.75 an ounce. Platinum <XPT=> was at $1,689.50 an ounce
against $1,666, and palladium <XPD=> at $506.50 against $504.
London's Platinum Week entered its second day on Tuesday,
with analysts, traders, refiners and recyclers meeting in the
British capital to discuss industry developments. For coverage
of the event, click on []
Refiner Johnson Matthey initiated proceedings on Monday with
the release of its Platinum 2010 report, in which it said it
expects the market to move closer to balance this year after
swinging into a surplus of 285,000 ounces last year.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
For a graphic showing Johnson Matthey's evaluation of the
platinum market's supply and demand fundamentals, click on:
http://graphics.thomsonreuters.com/10/PLT_SDH0510.gif
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
Platinum and palladium encountered heavy selling on Monday
along with other industrial metals, but have since regained some
lost ground.
"Although we would not rule out a deeper price correction in
the near term, particularly if investment softens further, we
maintain a positive bias towards both metals given our
expectations for auto and industrial demand to rebound and
strong physical investor appetite," Barclays said in a note.
The chief executive of Anglo Platinum <AMSJ.J>, the world's
biggest miner of platinum, said on Monday the company expects to
produce more than the 2.5 million ounces of metal it previously
forecast in 2010. []
(Editing by Amanda Cooper)
