* Dollar retreats versus the euro as risk appetite sharpens
* U.S. data, easing fears over Greece boost appeal of risk
* Palladium holds near last week's two-year high
(Corrects to show two-year high on palladium was at $480/oz
hit last week, not $477/oz hit on Monday)
By Jan Harvey
LONDON, March 8 (Reuters) - Gold prices firmed in Europe on
Monday as the dollar retreated against the euro, with risk
appetite sharpened by last week's firmed-than-expected U.S. jobs
data and concerns over Greece's fiscal health retreating.
Palladium, which is primarily used in catalytic converters,
held near the two-year high of $480 an ounce it hit at the end
of last week on expectations demand will rise, after strong car
sales data from the United States and China cheered investors.
Spot gold <XAU=> was bid at $1,135.20 an ounce at 1028 GMT,
against $1,133.80 late in New York on Friday.
Last week's above-forecast U.S. jobs data boosted hopes for
a global economic recovery, increasing investors' willingness to
take on risk and benefiting higher-yielding currencies, such as
the euro at the expense of the dollar <EUR=>.
"Gold is currently profiting from investors increasing their
risk appetite," said Peter Fertig, a consultant at Quantitative
Commodity Research.
"The link is of course the U.S. dollar, with the situation
in Greece easing, and with the U.S. economic outlook improving."
Concern over the fiscal health of debt-laden Greece and
other peripheral euro zone economies weighed heavily on the euro
last week, pushing the single currency to 9-1/2 month lows
versus the dollar. However, those fears are now receding.
French President Nicolas Sarkozy promised on Sunday that
euro zone countries would help Greece if its financial problems
worsened. []
Currency speculators cut by more than half their long bets
on the U.S. dollar in the latest week, according to Commodity
Futures Trading Commission data released on Friday
In a note, ScotiaMocatta said last week's higher close for
gold prices had left the metal well-placed for further gains.
"The close is constructive considering we are above the highs of
the past two weeks of $1,127 and $1,131," it said.
"Our initial topside target is the 2010 high of $1,161."
OIL RISES
Other commodities also benefited from the same sentiment,
with crude prices rallying to eight-week highs above $82 a
barrel on the weaker dollar and signs of an economic recovery in
top oil consumer the United States. []
Investment demand for gold firmed meanwhile, with holdings
of the world's largest gold-backed exchange-traded fund, the
SPDR Gold Trust <GLD>, rising 0.609 tonnes on Friday. []
However, jewellers in Asia sold back some of their holdings
on Monday to take advantage of firm bullion prices, while gold
bars were offered at a discount for the first time in two months
in Tokyo as selling persisted. []
Palladium <XPD=> rose as high as $477 an ounce, close to the
two-year high of $480 an ounce it hit late last week, and was
later at $475.50 against $471.
Robust auto sales figures in the major gasoline car markets
China and the United States lifted prices last week. While
diesel autocatalysts use a heavier loading of platinum than
palladium, petrol catalysts are more palladium-intensive.
"It is the relatively better demand for gasoline fuelled
autos and background concerns over Russian stock levels that is
supporting the palladium rally," said HSBC analyst James Steel
in a note.
Among other precious metals, platinum <XPT=> tracked
palladium higher to a 6-1/2 week high of $1,603 an ounce. It was
later at $1,599 an ounce against $1,569.50, while silver <XAG=>
was bid at $17.39 an ounce against $17.32.
(Reporting by Jan Harvey; Editing by William Hardy)
