* European governments act together to boost liquidity
* Dollar weakens as euro bounces
* Oil, base metals, other commodities trade recover
(Recasts, updates throughout, changes dateline, pvs SINGAPORE)
By Jan Harvey
LONDON, Oct 13 (Reuters) - Gold rose in Europe on Monday as
the dollar weakened, boosting the precious metal's appeal as an
alternative investment, and as oil prices climbed.
Commodities recovered almost across the board after Friday's
market rout, with crude futures, industrial metals, sugar,
grains and coffee all rising.
Spot gold <XAU=> was at $862.25/865.25 an ounce at 0911 GMT,
up from $847.40 in late New York trade on Friday. The metal
swung in a range of more than $100 that session as turmoil on
the financial markets spooked investors.
"Gold at this level is attractive, and we are looking for
higher prices -- towards $900," said Commerzbank analyst Eugen
Weinberg.
Gold was supported by a slip in the dollar versus the euro,
usually a key external driver of bullion prices. The euro
rallied broadly after European governments said they would work
together to stabilise the banking sector. []
"(A) correction in the dollar, coupled with the wide credit
spreads, should bode well for precious metals today," said
Standard Bank analyst Manqoba Madinane.
Analysts will be watching developments on other financial
markets closely, both for their influence on the dollar and on
demand for gold as a haven from risk.
Chaos on the equity markets last week boosted demand for
bullion, as investors sought safer assets than stocks. While
currencies were supportive on Monday, steadier equity markets
were likely to dampen investors' appetite for gold.
European shares rose more than 5 percent on Monday as
investors cheered bold plans by global governments and central
banks to stabilise the financial markets. []
European governments agreed to provide capital for banks
short of funds due to frozen money markets at an emergency
meeting in Paris over the weekend. Asian and Australasian banks
earlier announced calming moves of their own. []
EXTERNAL DRIVERS
If the markets settled, gold was expected to revert to
following its usual external drivers, the dollar and oil.
"If stock markets calm down and the fear index declines,
then gold is likely to follow again the usual fundamental
drivers," said Dresdner Kleinwort in a note.
Crude futures supported gold on Monday, rising more than $3
after Friday's more than 10 percent dive. []
Traders will also be eyeing investment interest in gold
exchange-traded funds. The world's largest gold-backed ETF, the
SPDR Gold Trust, said its holdings rose to a record 770.64
tonnes on Friday.
Silver <XAG=> climbed more than 5 percent to a session high
of $10.81 an ounce, up from $10.14 in late New York trade on
Friday. Later it was trading at $10.79/10.87.
More settled financial markets were expected to support the
industrial precious metals -- including silver, platinum and
palladium -- much more than gold.
Analysts were hoping a more settled outlook to the financial
markets would underpin demand for industrial metals.
"Platinum and palladium should benefit from confidence
coming back into the industrial metals," said Weinberg.
Palladium <XPD=> also climbed nearly 5 percent to a high of
$197 an ounce, before settling back to trade at $196/201 an
ounce against $188.
Platinum languished, however, on fears demand from carmakers
will be lacklustre this year and into next year. Spot platinum
<XPT=> was at $968/998 an ounce against $980.50.
(Reporting by Jan Harvey; editing by Christopher Johnson)
