* Dollar slides to 6-week low vs euro, currency basket
* Firmer equity markets boost appetite for risk
(Releads, updates prices)
By Jan Harvey
LONDON, July 20 (Reuters) - Gold rose nearly 2 percent in
Europe on Monday as oil prices climed and the dollar slipped to
a six-week low against a basket of currencies, boosting the
precious metal's appeal as a currency hedge.
Commodities across the board benefited from a sharper
appetite for risk, dealers said, with world stocks rallying and
equities touching a 10-month high in Asia as investors were
tempted back into higher-yielding assets.
Spot gold <XAU=> rose to a five-week high of $953.70, its
firmest since June 12, and was bid at $952.20 an ounce at 1052
GMT, against $936.50 an ounce late in New York on Friday.
"There is a combination of both a weaker dollar (and)
appetite for commodities coming back with the hope of an
economic recovery," said Alexander Zumpfe, a trader at precious
metals house Heraeus.
"From a pure technical point of view, we might see some
higher prices over the next couple of days."
The dollar slid to a six-week low against the euro <EUR=>
and versus a basket of six major currencies <.DXY> as rising
stock markets boosted appetite for higher-yielding currencies
seen as riskier. []
Other commodities also benefited from stronger risk
appetite, with oil climbing nearly $1 a barrel and copper rising
to its highest level since October. [] []
Equities hit a 10-month peak in Asia as investors'
confidence was boosted by a solid outlook for corporate earnings
and speculation that U.S. lender CIT Group <CIT.N> has probably
escaped bankruptcy after news it clinched a last-minute $3
billion rescue deal. []
Banks and drugmakers also helped lift European shares. []
Traders are awaiting earnings reports from the likes of
Texas Instruments <TXN.N>, Caterpillar <CAT.N> and Merck & Co
<MRK.N> this week, as well as Federal Reserve chair Ben
Bernanke's testimony to Congress on monetary policy on Tuesday
and Wednesday.
BREAK HIGHER
Analysts say the euro's break up through $1.42 may fuel
further gains in the gold price. Bullion, like all dollar-priced
commodities, becomes cheaper for holders of other currencies as
the U.S. unit weakens.
Demand for physical gold remained lacklustre, with the main
bullion-backed exchange-traded fund, the SPDR Gold Trust,
reporting a 0.31-tonne outflow on Friday. The fund said its gold
holdings dropped more than 15 tonnes last week. []
Jewellery demand in India was also soft, pressured by the
seasonal summer lull. []
On the supply side, Peter Hambro Mining <POG.L>, the
Russia-focused FTSE 250 gold miner, said its gold output jumped
54 percent in the first half and added second-half production
would be boosted by its Pioneer deposit. []
Among other precious metals, silver <XAG=> tracked gold
higher, rising more than 2 percent to $13.66 an ounce from
$13.39.
"We still see more consolidation around these levels after
the ongoing rally exhausts itself," said VTB Capital in a note.
Platinum <XPT=> was at $1,183 an ounce against $1,171, while
palladium <XPD=> was at $250.50 against $246.
(Editing by James Jukwey)
