PRECIOUS-Gold falls on China interest rate rise talk

                                
 * Gold caught in wider commodities selling
* Dollar surrenders gains vs euro as EU leaders reassure
* Platinum, silver, palladium slide in gold's wake
                                
 (Updates prices, adds comment)
                                
 By Jan Harvey
                                
 LONDON, Nov 12 (Reuters) - Gold fell on Friday as talk China
may raise interest rates raised demand concerns from the major
commodities consumer and as expectations of an EU rescue package
for Ireland removed some safe-haven demand for the metal.
                                
 Spot gold <XAU=> was bid at $1,369.04 an ounce at 1654 GMT
against $1,409.39 late in New York on Thursday, off a session
low of $1,368.20 an ounce which was the lowest in just over a
week. At 2.7 percent, it was the biggest one-day percentage fall
since July 1.
                                
 U.S. gold futures for December delivery <GCZ0> fell $32.8 an
ounce to $1,370.5.
                                
 Prices earlier slipped sharply as concerns that Ireland
would, like Greece, need a bailout knocked the euro, and as the
metal was caught up in selling of assets seen as higher risk
amid talk of a Chinese rate hike. [ID:nTOE6AB04G]
                                
 "(Gold is) very vulnerable to sell-offs," said David
Thurtell, a London-based analyst for Citigroup.
                                
 "People are worried now about China tightening. China has
been driving a lot of commodities and so fears of further
interest rate rises in China ... will have an impact on buying."
                                
 The euro rose from a six-week low against the dollar after
European leaders sought to reassure nervous bondholders about
the value of their holdings. [USD/]
                                
 Ireland's finance ministry said on Friday it has not
formally applied for emergency funding from the European Union
after euro zone sources said the government was in talks about
tapping emergency funds. [ID:nWLA7942a] [ID:nTOE6AB04P]
                                
 
                                
 LOWER STOCK MARKETS
                                
 Meanwhile major European stock markets were lower after a
weak session in Asia which notably saw the Shanghai composite
index <.SSEC> fall 5 percent, its biggest one-day drop since
May, on talk of another Chinese interest rate hike. [MKTS/GLOB]
                                
 U.S stocks dropped and were on course to end a five-week
winning streak. [.N]
                                
 G20 leaders drew a veil over their economic policy disputes
on Friday, agreeing to tackle tensions that have raised the
spectre of currency wars and giving the nod to countries that
have seen huge capital inflows to impose controls.
[ID:nN11196971]
                                
 On the physical side of the market, Indian gold traders
hunted for bargains after prices retreated from record highs,
stocking up for weddings in the world's biggest bullion
consumer. [ID:nSGE6AB09Y]
                                
 Interest in investment vehicles like exchange-traded funds
was soft, however, with holdings of the world's largest
gold-backed ETF, New York's SPDR Gold Trust <GLD>, falling by
just under 1 tonne on Thursday. [GOL/SPDR]
                                
 Oil meanwhile tumbled some 2 percent and base metals fell as
commodities came under pressure from investor caution and
speculation over China.
                                
 Among other precious metals, spot silver <XAG=> was bid at
$26.19 an ounce against $27.75, while platinum <XPT=> was at
$1,684.99 an ounce against $1,752 and palladium <XPD=> was at
$678.97 against $709.72.
 (Additional reporting by Marie-Louise Gumuchian; editing by
Anthony Barker)