* IMF sees developed economies contracting in 2009
* ECB, SNB, BoE cut rates; dollar firms vs euro
* European shares languish but pare losses on firmer Wall St
(Recasts; updates prices; adds comment)
By Jan Harvey
LONDON, Nov 6 (Reuters) - Gold climbed more than 2 percent
on Thursday as weaker stock markets and the gloomy outlook for
the global economy fuelled risk aversion.
Equity markets languished in Europe despite a spate of
interest rate cuts in the region, with the European Central
Bank, the Bank of England and the Swiss National Bank all opting
to reduce rates.
If rates fall, the appeal of non-interest bearing
investments such as gold increases.
Spot gold <XAU=> was quoted at $746.00/748.50 at 1240 GMT,
up from $739.45 an ounce late in New York on Wednesday.
The International Monetary Fund said prospects for global
growth have deteriorated in the last month and developed
economies are heading for their first full-year contraction
since World War II. []
"Things are going to be quite poor in the fourth quarter and
gold is starting to react to that," said Standard Chartered
analyst Daniel Smith. "There is more recognition that we are
heading into a global recession."
Gold was steady in morning trade but jumped after the Bank
of England slashed rates by a consensus-beating 150 basis points
and the Swiss National Bank cut its rates by half a point.
The ECB also cut rates by 50 basis points as expected.
"Interest rate cuts would provoke inflationary fears in the
longer term, and a lower opportunity cost would promote gold
investments," said Commerzbank analyst Eugen Weinberg.
European stocks fell in early trade and received only a
temporary fillip from a spate of rate cuts. Share prices lifted
from lows after a positive opening on Wall Street, however.
[]
Traders are now awaiting U.S. non-farm payrolls data, due on
Friday, for clues to the next direction of trade.
The announcement is likely to have a significant effect on
the currency markets, which will impact gold. The precious metal
is often bought as a hedge against weakness in the U.S. dollar,
and typically moves in the opposite direction to it.
"Despite the rate cuts many participants may remain
sidelined until tomorrow's U.S. non-farm payroll data is
released," said Standard Bank analyst Walter de Wet.
The dollar was a touch firmer against the euro on Thursday
in the wake of the rate cuts. []
SILVER DEMAND FIRM
Among the other precious metals, spot palladium <XPD=> rose
more than 5 percent to a session high of $229.50 an ounce,
before easing back to $222/232 against $216.
The metal has benefited from bargain hunting after prices
slipped more than 50 percent since July. However, a slowdown in
demand for the metal from carmakers, the major users of
palladium, is still likely to weigh on prices.
"All European car companies are now well hedged in both
palladium and platinum, so any price increase will be fully
speculative," said one German-based trader.
Platinum steadied after tumbling more than 4 percent in Asia
as investors took profits after Thursday's hefty rise.
Spot platinum <XPT=> was quoted at $853.50/873.50 against
$862 an ounce late in New York on Wednesday, having earlier
touched a low of $824.50.
Meanwhile silver <XAG=> was little changed at $10.41/10.52
an ounce against $10.37.
While prices remain closely correlated to the dollar,
physical demand for the metal remains firm, with holdings of the
world's largest silver-backed exchange traded fund, the iShares
Silver Trust, still only 2 percent down from all-time highs.
(Reporting by Jan Harvey; editing by Karen Foster)
