* Euro's rise on Greece rescue plan lifts gold
* Fears over outlook for paper currencies also lend support
* U.S. car sales tepid in February
(Updates prices)
By Jan Harvey
LONDON, March 3 (Reuters) - Gold rose to 6-1/2 week highs at
$1,141.70 an ounce on Wednesday as the dollar extended losses
versus the euro, and as broader fears over the outlook for paper
currrencies lent further support to the precious metal.
Spot gold <XAU=> was bid at $1,138.25 an ounce at 1241 GMT,
against $1,134.50 late in New York on Tuesday. U.S. gold futures
for April delivery <GCJ0> on the COMEX division of the New York
Mercantile Exchange rose $1.40 to $1,139.10 an ounce.
The metal held near the record highs it hit on Tuesday in
euros and sterling terms, boosted by volatility in the foreign
exchange markets.
"Gold is being used as a bit of an alternative to
currencies," said Citigroup analyst David Thurtell. "It takes
you out of dollar or euro exposure and puts you into a
non-currency."
Gold is also benefiting from weakness in the dollar as it
boosts gold's appeal as an alternative asset and makes
dollar-priced commodities cheaper for holders of other
currencies.
The euro extended gains against the U.S. unit on Wednesday
to hit the day's high as a Greek government source cited details
of fresh plans to tackle Greece's debt problems. []
The Greek government endorsed a 4.8 billion euro austerity
package, but markets were wary over whether it would be enough
for Athens to win financial support from its European partners.
[]
Concern over the fiscal health of peripheral euro zone
economies like Greece, Italy and Spain have weighed heavily on
the euro this year. It is currently down nearly 5 percent versus
the dollar in 2010.
"The euro is oversold at the moment, but there is no
guarantee that it does not have more downside especially given a
quickly improving U.S. macro-economic environment," said VTB
Capital analyst Andrey Kryuchenkov.
DAYA EYED
Traders are awaiting ADP U.S. employment data due later in
the day, which is seen as a key precursor to Friday's
closely-watched non-farm payrolls data for February.
"Markets will look to Wednesday's key ADP Employment Change
survey data as well as the market-moving ISM Services report (at
1500 GMT)," said Richcomm Global Services senior analyst Pradeep
Unni. "The U.S. non-farm payrolls report on Friday (will) be key
data."
Among other commodities, oil climbed above $80 a barrel on
Wednesday as the dollar weakened and investors looked ahead to a
U.S. energy inventory report due later. []
Elsewhere silver <XAG=> was bid at $17.11 an ounce against
$16.92, having earlier touched a five-week high of $17.17.
The world's largest silver-backed exchange-traded fund, the
iShares Silver Trust <SLV>, said its holdings fell 3.46 tonnes
from the previous day to 9,473.45 tonnes as of March 2.
Platinum <XPT=> was at $1,576 an ounce against $1,566.50,
while palladium <XPD=> was at $442 against $439.
U.S. auto sales stalled in February as a safety crisis sent
Toyota Motor Corp <7203.T> <TM.N> reeling, allowing Ford Motor
Co <F.N> to leap into the industry's top spot for the first time
since 1998. []
Both platinum and palladium are heavily exposed to the
automotive sector, as they are primarily used in the production
of autocatalysts.
(Reporting by Jan Harvey; Editing by Keiron Henderson)
