* Gold jumps 2 pct on financial turmoil, Lehman Chap. 11
* Bullion gains for second day, rebounding from 11-month
low
* Silver, riding gold's coattails, gains 2.3 pct
(Updates prices)
By Nick Trevethan
SINGAPORE, Sept 15 (Reuters) - Gold and silver jumped more
than 2 percent on Monday, with bullion gaining for a second day
as Lehman Brothers' bankruptcy and anxiety over the stability
of U.S. financial markets spurred a rush toward safety.
Lehman Brothers Holdings <LEH.N> said it was filing for
Chapter 11 bankruptcy protection, shaking faith in the
stability of the U.S. financial system and sparking talk of a
possible interest rate cut, boosting gold's investment appeal.
For more stories on Lehman, click on [].
The dollar dropped as much as 1 percent against the euro,
adding to Friday's slide, its biggest one-day decline against
the single currency in six months <EUR=>, which lifted bullion.
"Gold is on fire right now. There is a huge amount of
nervousness about Merrill and Lehman. The financials are being
hit really hard and things could get very interesting once U.S.
markets open," Peter McGuire, managing director of Commodity
Warrants Australia said.
"These are not normal events and people are running to
safety, running to quality," he said, adding that gold could
rally to $820 to $830 in the next couple of days.
Spot gold <XAU=> rose 2 percent or $14.85 to $778.30 an
ounce at 0646 GMT from Friday's nominal close in New York.
Prices were climbing from a second day, recovering from last
Thursday's tumble to an 11-month intra-day low of $736 an
ounce.
Silver <XAG=> gained 1 percent or 11 cents to $10.94.
"Gold's price response today looks like safe-haven
behaviour. The Lehman story is dominating markets, while
bullion is probably getting a bit of a lift from the dollar,"
Gerard Burg, an analyst at National Australia Bank, said.
"But the longer-term is still bearish. In relative terms
gold has been pretty soft as the dollar strengthened. Also
Indian demand looks comparatively weak and the gold market
can't live without India."
As Lehman's woes simmer, problems with other big Wall
Street names could be brewing. Insurance giant AIG <AIG.N> was
reported to be seeking around $15 billion in extra capital to
stave off ratings downgrades [].
But a takeover of brokerage Merrill Lynch <MER.N> for $44
billion by Bank of America <BAC.N> took a little of the
uncertainty out of the market. []
Oil <CLc1> fell 2.1 percent to $99.02 a barrel and earlier
touched $98.46, its lowest since Feb. 26, as dealers bet on a
swift recovery in U.S. energy production after former Hurricane
Ike moved inland and the government loaned oil to two
refiners.
Asian markets, including the Tokyo Commodity Exchange and
markets in China and Hong Kong, were closed for holidays.
Spot platinum <XPT=> rose 1 percent to $1,215.00 an ounce
from Friday. Spot palladium <XPD=> gained 50 cents to $243.00
an ounce.
Precious metals prices at 0622 GMT
Metal Last Change Pct chg YTD pct chg
Spot Gold 781.90 18.45 +2.42 -6.10
Spot Silver 11.06 0.23 +2.12 -25.12
Spot Platinum 1215.00 12.50 +1.04 -20.07
Spot Palladium 243.00 0.50 +0.21 -33.97
Euro/Dollar 1.4374
Dollar/Yen 105.47
(Editing by Jonathan Leff)
