* Upbeat economic view lifts cyclical assets, pressures gold
* Egypt unrest lends support as Chinese buying stalls
* Palladium flirts with 10-year high after car sales rise
(Updates prices, adds comment)
By Jan Harvey
LONDON, Feb 2 (Reuters) - Gold prices eased in Europe on
Wednesday after well-received U.S. economic data and a spate of
upbeat corporate earnings deflected interest away from bullion
on to higher-risk, higher-yielding assets.
Concern over unrest in Egypt and the prospect that it could
spread into the wider Middle East is continuing to put a floor
on prices, though it is prompting little new buying.
Spot gold <XAU=> was bid at $1,336.29 an ounce at 1348 GMT,
against $1,340.45 late in New York on Tuesday. U.S. gold futures
for April delivery <GCJ1> fell $3.00 an ounce to $1,337.30.
Peter Hillyard, an analyst at ANZ Bank in London, said gold
was lacking direction after its retreat from record highs.
"The sell-off seemed to illustrate that people had lost
faith in gold and could see much better places to invest," he
said. "(But) I don't think people want to sell it. They are
fearful about what is going to happen in the Middle East, and
what really is going on in the markets.
"By the same token, they are wondering, if they buy it, what
the upside is. So they are on the sidelines."
World stocks hit 29-month highs on Wednesday, with strong
factory data pointing to sustained global economic recovery and
positive corporate earnings fuelling gains. []
European shares also rose as corporate earnings continued to
underpin investor risk appetite while U.S. stock index futures
were little changed after the Dow and S&P advanced to their
highest close in about 2-1/2 years on Tuesday. [] []
While cyclical assets have benefited from a more positive
view of the economic outlook, gold has not, analysts said.
"Investors are still reluctant to jump back on the market,
expecting little upside for gold should risk aversion retreat,
while major central banks will eventually have to turn back to
tackling inflation and reducing liquidity," said VTB Capital.
EGYPT LENDS SUPPORT
Concern over unrest in Egypt continued to support gold
prices, however.
The European Union called Egyptian President Hosni Mubarak's
decision not to stand for re-election a step in the right
direction on Wednesday, but said his new cabinet did not
constitute a representative government. []
Mubarak's decision had angered protesters who want an
immediate end to his 30-year rule and prompted the United States
to say change "must begin now." []
"Political turmoil in Egypt couldn't have come at a better
time for gold," said UBS in a note. "With demand from China, the
largest physical consumer of late, slowing into the Lunar New
Year, geopolitical risk has provided a new support.
"Not that events in Egypt have injected a premium into the
gold price - they have not - but they have kept more weak longs
from liquidating and induced some short-covering."
Meanwhile gold priced in sterling <XAUGBP=R> fell to its
lowest since late September as the pound hit a three-month low
versus the dollar. []
Among other precious metals, palladium prices rose towards
their highest in nearly a decade after a raft of upbeat car
sales numbers. Like platinum, the majority of palladium is
consumed by car manufacturers for use in catalytic converters.
General Motors Co <GM.M> and Chrysler posted U.S. sales
gains of more than 20 percent for January, while U.S. auto sales
rose 17 percent, a sign that the consumer-led recovery remained
on track. []
Platinum <XPT=> was at $1,831 an ounce against $1,825, while
palladium <XPD=> was at $816.72 against $819.47. Silver <XAG=>
was bid at $28.35 an ounce against $28.49.
(Editing by James Jukwey)
