* Markets nervous ahead of U.S. economic data
* Gold set to outperform other metals in H2 as fear persists
* SPDR gold ETF holdings hit record 1,320.436 T
* Coming up: U.S. ADP employment report, 1215 GMT
(Updates throughout, changes dateline from SINGAPORE)
By Jan Harvey
LONDON, June 30 (Reuters) - Gold steadied in Europe on
Wednesday, giving up early gains, after relatively low demand at
the European Central Bank's latest bank refinancing operations
eased some concerns over euro zone bank finances.
Gold is still set to be the best-performing metal of the
second quarter, however, as fears over the global growth outlook
and the stability of the financial system persist.
Spot gold <XAU=> was bid at $1,240.45 an ounce at 0944 GMT,
against $1,238.00 late in New York on Tuesday, having earlier
risen as high as $1,244.55. U.S. gold futures for August
delivery <GCQ0> eased 90 cents an ounce to $1,241.50.
The metal is well placed to extend gains after ending
Tuesday in positive territory, after lacklustre U.S. consumer
confidence data fuelled selling of higher-risk assets. Analysts
say it may revisit last week's record high at $1,264.90.
"It could easily get there if economic data is
disappointing," said Citigroup analyst David Thurtell, who
attributes the metal's current rise to safe-haven demand.
"ISMs and U.S. payrolls over the next two days are crucial.
If they are poor, we will see further equity market weakness,
which should help gold."
The U.S. ADP June employment report, which precedes Friday's
key non-farm payrolls data, is due at 1215 GMT.
The euro jumped and gold dipped briefly lower after the
European Central Bank said it lent banks a lower-than-expected
131.9 billion euros ($161.4 billion) in three-month funds at a
tender on Wednesday.
The process was closely watched, as banks face the repayment
of close to half a trillion euros in 12-month funds later this
week. Analysts said the relatively low demand should help ease
fears over bank finances which have rocked stock markets this
week. []
European shares also turned positive in the wake of the
tender, stabilising after steep falls a day earlier. Asian
shares earlier ended the second quarter with their worst
performance since the collapse of Lehman Brothers. []
GOLD OUTPERFORMS IN H2
Among other commodities, oil and base metals eked out some
modest gains in early trade, correcting from the previous
session's heavy losses. Both remain under pressure from concerns
over economic recovery, however. [] []
Most commodities are heading for a weak end to the first
half, with many on course for their first quarterly loss in 18
months, under pressure from a toxic mix of risk aversion, equity
losses and debt worries. []
In this environment, gold tended to outperform. It has risen
the most among metals in percentage terms in the second quarter.
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For a graphic showing the relative performance of different
commodities so far this year, click on:
http://graphics.thomsonreuters.com/10/CMD_PRFG0510.html
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Demand for physical gold as an investment vehicle remained
strong, with holdings of the world's largest gold-backed
exchange-traded fund, New York's SPDR Gold Trust <GLD>, rising
to a record 1,320.436 tonnes on Tuesday. []
In Hong Kong, premiums for gold bars, a key indicator of
demand, rose. Meanwhile dealers reported scrap sales in India,
the world's biggest gold market, were lacklustre despite high
prices as potential sellers bet on further gains. []
"Selling (of scrap) is at zero. For the last one week it has
been like this because people are waiting for prices to hit
20,000 rupees ($429) per 10 grams," said Jitendra Kantilal,
partner at Jugraj Kantilal & Co, a scrap buyer in Mumbai.
Among other precious metals, silver <XAG=> was bid at $18.56
an ounce against $18.46, platinum <XPT=> at $1,534.50 an ounce
versus $1,539.50, and palladium <XPD=> at $452 against $450.
(Editing by James Jukwey)
