* Equities weaken in Europe, Asia after GM statement
* ECB, BoE both cut rates by 50 basis points
* SPDR gold ETF holdings remain static
(Updates with European rate decisions, adds comment)
By Jan Harvey
LONDON, March 5 (Reuters) - Gold rose more than 1 percent on
Thursday as equity markets extended losses on concerns over the
outlook for U.S. carmaker General Motors, and after interest
rate cuts by the European Central Bank and Bank of England.
Spot gold <XAU=> firmed to $913.40/915.40 an ounce at 1310
GMT from $906.90 late in New York on Wednesday. U.S. gold
futures for April delivery <GCJ9> on the COMEX division of the
New York Mercantile Exchange rose $8.40 to $915.10 an ounce.
"Looking at the equity markets, we are a little weaker,
which may help gold today," said BNP Paribas analyst Michael
Widmer. "We are seeing support emerging after the sharp price
falls of the past few weeks."
European equity markets and U.S. stock index futures slipped
after GM <GM.N> said there was substantial doubt about its
ability to continue as a going concern. []
Meanwhile the ECB cut its benchmark interest rate by 50
basis points as expected, to 1.5 percent to counteract a
weakening economy. The cut is its fifth since October.
[]
Earlier the Bank of England cut its rates by 50 basis points
to a historic low of 0.5 percent, and said it would buy assets
worth 75 billion pounds to help the ailing British economy.
[]
Among the external drivers of gold, the dollar pared gains
against the euro after the ECB cut. Traders will be watching ECB
president Jean-Claude Trichet's 1330 GMT press conference for
details of further moves to stimulate growth. []
While a stronger dollar typically weighs on gold, which is
often bought as a hedge against weakness in the U.S. currency,
both assets are still reacting chiefly to risk aversion.
"The risk aversion theme is still out there to support the
dollar," said Widmer.
Oil prices fell towards $44 after surging nearly 9 percent
overnight after government data showed a surprise drop in U.S.
stocks. []
Enthusiasm for gold is muted, however, by fears over supply
and demand. A major source of consumption of the yellow metal,
buying for gold-backed exchange-traded funds, has stalled in
recent weeks.
Holdings of the largest ETF, New York's SPDR Gold Trust
<GLD>, remain at 1,029.29 tonnes, static from the level they hit
last Thursday. []
Its holdings have risen only 5 tonnes in the last fortnight,
compared with 205 tonnes in the first six weeks of 2009.
SURGING
On the supply side, dealers in Asia and the Middle East
report surging inflows of scrap as holders take advantage of
high prices. Turkey imported no gold last month as domestic
supply met needs, and Indian scrap selling is also picking up.
"With scrap sales continuing to be seen and risk appetite
improving the metal will remain vulnerable to further pockets of
liquidation," James Moore, analyst at TheBullionDesk.com, said.
Fresh buying in India has also been lacklustre as high
prices discourage purchases.
Gold has been in a consolidation phase as investors consider
the outlook for other markets. The fear that drove the metal
above $1,000 an ounce in February has been easing, analysts say.
"While we have seen safe-haven buying as the key driver in
the last few weeks, that is clearly dropping out of the system,
which has allowed gold to come back (down)," Standard Chartered
analyst Daniel Smith said.
Gold has suffered as appetite for 'riskier' assets such as
equities has picked up. A rebound in the stock markets on
Wednesday knocked gold to a three-week low of $900.95. However,
as stocks fell the precious metal has moved higher.
Among other precious metals, spot silver <XAG=> tracked gold
higher to $13.08/13.14 an ounce from $12.90, while spot
palladium <XPD=> was at $198/202 an ounce from $196.
Platinum prices inched higher after firming more than 1
percent on Wednesday on hopes China would ramp up plans to
stimulate the economy. Spot platinum <XPT=> was quoted at
$1,055.50/1,060.50 an ounce from $1,046.
(Reporting by Jan Harvey; Editing by Peter Blackburn)
