* Europe rate hike delay counters Japan fears
* Violence sweeps Libya, Bahrain, adding to fear premium
* Platinum recovers but investors worry over Japan demand
* Coming up: U.S. initial jobless claims Thursday
(Rewrites, updates prices, comments, adds second byline,
dateline)
By Frank Tang and Amanda Cooper
NEW YORK/LONDON, March 16 (Reuters) - Gold rebounded
Wednesday after the previous day's 2 percent drop, as investors
shifted the focus back on loose monetary policies and
geopolitical tensions and away from Japan's nuclear crisis.
Bullion was underpinned by a European Central Bank
policymaker's comment which suggested the ECB could possibly
delay an April interest hike, and after Moody's credit rating
agency downgraded Portugal by two notches late Tuesday.
"Now that the dust has settled a little bit and we've had
particularly a recovery in energy and other commodities, that's
given a tailwind to gold," said HSBC analyst James Steel. "If
the focus ceases to be entirely on Japan, and the Middle East
again gets some headlines, then the geopolitical risk levels
will come back in and support gold."
ECB's comment gave gold a slight boost and economists said
it had not significantly diluted expectations of a rate hike in
April.
European and U.S. shares slid for a third day, and that
stoked safe-haven buying in gold and also U.S. Treasuries, as
the nuclear crisis in Japan raised concerns about slower
worldwide growth. []
Spot gold <XAU=> gained 0.3 percent to $1,397.50 an ounce
at 12:38 p.m. EDT (1638 GMT), while U.S. gold futures for April
delivery <GCJ1> rose 0.4 percent to $1,398.10.
Unrest that swept the Middle East and North Africa earlier
this year, a key factor pushing gold to a record $1,444.40 an
ounce last week, continues to simmer.
The Libyan army closed in on the opposition bastion of
Benghazi on Wednesday, while in Bahrain forces fired tear gas
in a crackdown on protesters. [] []
Japan's nuclear crisis appeared to be deepening after
workers withdrew briefly from a stricken power plant because of
surging radiation levels and a helicopter failed to drop water
on the most troubled reactor. []
Platinum and palladium turned lower as buyers remain nervous
on fears the earthquake in Japan could hurt demand for the
metals used in auto catalysts.
Platinum <XPT=> slipped 0.4 percent to $1,693.99 an ounce,
while palladium <XPD=> dropped 0.8 percent to $698.72. Silver
<XAG=> gained 0.5 percent to $34.47 an ounce.
Prices at 12:38 p.m. EST (1638 GMT)
LAST NET PCT YTD
CHG CHG CHG
US gold <GCJ1> 1397.50 4.70 0.3% -1.7%
US silver <SIK1> 34.470 0.353 1.0% 11.4%
US platinum <PLJ1> 1699.00 -6.60 -0.4% -4.5%
US palladium <PAM1> 700.05 -4.85 -0.7% -12.9%
Gold <XAU=> 1397.50 3.55 0.3% -1.5%
Silver <XAG=> 34.47 0.18 0.5% 11.7%
Platinum <XPT=> 1693.99 -6.01 -0.4% -4.2%
Palladium <XPD=> 698.72 -5.78 -0.8% -12.6%
Gold Fix <XAUFIX=> 1402.00 3.50 0.3% -0.6%
Silver Fix <XAGFIX=> 34.73 85.00 2.5% 13.4%
Platinum Fix <XPTFIX=> 1726.00 30.00 1.8% -0.3%
Palladium Fix <XPDFIX=> 719.00 8.00 1.1% -9.1%
(Additional reporting by Jan Harvey in London;editing by
Sofina Mirza-Reid)
