* Euro firms versus dollar after 2-1/2 year low
* Stock markets recover in Asia, Europe
* Platinum rebounds 6 pct, palladium more than 4 pct
(Recasts, adds comment, changes dateline, pvs SINGAPORE)
By Jan Harvey
LONDON, Oct 28 (Reuters) - Gold climbed more than 3 percent
in Europe on Tuesday as the dollar softened against the euro and
a recovery in equities curbed selling of bullion to cover losses
on other markets.
Platinum also rallied, cheered by the recovery in gold
prices, rising more than 6 percent to a session high of $821.50.
Spot gold <XAU=> rose to a session high of $755.00, before
slipping back to $743.75/745.75 at 1041 GMT. Late in New York on
Monday it was quoted at $729.60 an ounce.
European shares rose in early trade to break a five-day
losing streak, which had prompted investors to sell gold to
cover losses on the equity markets. []
"There is some more confidence coming into the system that
deleveraging is almost done," said Commerzbank analyst Eugen
Weinberg. "There was no reason to liquidate gold except for
deleveraging, because it is still a safe haven."
"We expect the Fed and the European Central Bank to cut
rates over the coming months, and that will put real interest
rates into more negative territory. There is a very positive
environment behind the gold price."
The dollar slipped almost 1 percent against the euro after
earlier hitting a 2-1/2 year high versus the single currency.
[]
Traders are eyeing the two-day rate-setting meeting of the
U.S. Federal Open Market Committee, which is expected to deliver
a decision on Wednesday.
The Fed is expected to cut lending rates by half a
percentage point to 1 percent, the lowest since June 2004, in a
bid to calm turmoil in the financial markets. []
"Investors might prefer the sidelines ahead of the Fed's
interest rate decision, due tomorrow," said Standard Bank
analyst Manqoba Madinane.
"With interest rate futures pricing in a 66 percent
probability of a 50 basis point Fed rate cut, the greenback's
movements today will hog the limelight."
Oil prices also ticked higher, rising by $1 in Asian trade,
tracking a rebound in stock markets. Firmer crude prices
typically support gold, which is often bought as a hedge against
oil-led inflation. []
PLATINUM, PALLADIUM JUMP
Platinum rebounded, climbing by 6 percent to its session
high of $821.50, as the softer dollar boosted interest in the
precious metal.
The metal has been pressured to multi-year lows amid fears
over falling demand from carmakers, who account for around 50
percent of annual platinum consumption.
Major platinum producer Aquarius Platinum Ltd <AQP.AX> said
in its first-quarter earnings report it has closed a shaft of
its Marikana mine for care and maintenance against a backdrop of
falling prices.
"This might help turn attention back onto supply-side
issues," said Tom Kendall, precious metals strategist at
Mitsubishi Corp. "Though undoubtedly (there is) more bad news to
come from auto sector too in the weeks ahead."
Traders are also awaiting results from the world's number
three platinum miner Lonmin <AQP.L> later in the week.
Spot platinum <XPT=> was quoted at $793.50/813.50 an ounce,
up from $772.50 in late New York trade on Monday. Palladium
<XPD=> climbed more than 4 percent to a session high of $175 an
ounce before settling to $170/180 an ounce from $167.50.
Spot silver <XAG=> dipped to $8.88/8.98 an ounce from $9.01.
Holdings of the world's largest silver-backed exchange-traded
fund, the iShares Silver Trust <SLV.A>, fell a further 1 pct on
Monday and are down 144 tonnes week-on-week. []
(Reporting by Jan Harvey; editing by Anthony Barker)
