* 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, adds comment, detail of data release)
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 $1,137.95 an ounce at 1421 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 $1.30 to $1,138.70 an ounce.
Prices are benefiting not only from dollar weakness, which
boosts gold's appeal as an alternative asset and makes
dollar-priced commodities cheaper for other currency holders,
but from fears over financial instability in general.
"The market is looking for some security with gold," said
Commerzbank analyst Eugen Weinberg. "The problems in the euro
zone, and the problems in Greece, may well pull people into the
gold market as they look for diversification and security."
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 such as 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 also benefited on Wednesday from data showing the
U.S. private sector shed 20,000 jobs in February, in line with
expectations. The numbers are seen as an important precursor to
key U.S. non-farm payrolls data due on Friday. []
EURO, STERLING GOLD FIRM
Gold prices held near the record highs they 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."
Euro-priced gold <XAUEUR=R> hit a high of 835.97 euros and
ounce, close to the previous session's record 836.72 an ounce,
while gold priced in sterling <XAUGBP=R> rose as high as 758.99
pounds an ounce, just off its record high of 759.86 an ounce.
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 $17.17 an ounce against
$16.92, having earlier touched a five-week high of $17.26.
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 $1,578 an ounce against $1,566.50,
while palladium <XPD=> was at $441.50 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)
