* Gold benefits from fresh buying as risk aversion flares
* AIG seeks cash injection, HSBC unveils rights issue
* SPDR gold ETF holdings unchanged, iShares Silver dips
(Updates throughout, changes dateline - pvs TOKYO)
By Jan Harvey
LONDON, March 2 (Reuters) - Gold climbed nearly 2 percent in
Europe on Monday on risk aversion, after insurer American
International Group said it had sought a third bailout from the
U.S. government and as equity markets fell.
Spot gold <XAU=> rose to $951.55/952.55 an ounce at 1043 GMT
from $939.90 late in New York on Friday. Earlier it touched a
high of $958.00.
"Nervousness in the financial sector is the single most
important factor behind gold's strength," said Commerzbank
analyst Eugen Weinberg. "The gold price is a fear barometer."
Falling equity markets suggest investors may be rotating out
of so-called riskier assets such as stocks in favour of gold, he
said. World stocks slid to a near six-year low on Monday, with
the MSCI world equity index <.MIWD00000PUS> falling 1.9 percent.
"Investors are taking a position in order to protect their
portolios against possible risk," said Weinberg. "If the gold
price keeps rising, it would indicate there are more troubles
ahead for the financial markets."
European shares slid on Monday, led by HSBC <HSBA.L> after
the bank announced a big rights issue, and insurance stocks,
which fell on the news from AIG <AIG.N>. []
The insurer is set to take a $30 billion lifeline from the
U.S. government, its third bailout package, sources said.
[]
The news boosted the dollar against most currencies as
investors said the U.S. unit looked less risky than other
monies. []
A stronger dollar typically weighs on gold, which is often
bought as a hedge against weakness in the currency. However,
both assets are currently benefiting from risk aversion.
Gold also shrugged off a decline in its other main external
driver, the oil price, which usually pulls bullion along with
it. Oil slid 3.5 percent on Monday after a spate of poor
economic data fuelled demand fears. []
The world's largest gold-backed exchange-traded fund, New
York's SPDR Gold Trust <GLD>, said it saw no fresh inflows on
Friday, although its holdings remain at record levels.
[]
Buying by bullion ETFs, which issue securities backed by
physical gold, has formed a major tranche of demand since the
beginning of the year. However, these inflows waned last week.
ABSENT
"If ETF inflows remain absent from the market, we suspect
that gold can test lower levels in the days to come," said UBS
strategist John Reade in a note.
"But it is worth noting that our U.S. ETF desk reported the
strongest buying interest for weeks on Friday, all from
retail buyers," he added.
He said that if this became a stronger trend in the market
it could mark the end of the correction in gold.
Analysts say they are watching a raft of key data due out
later in the week for clues as to the next direction of the
markets. U.S. ISM manufacturing data for February is due out at
1500 GMT.
China, the UK and the euro zone have already reported
declines in manufacturing activity for that month, with euro
zone manufacturers suffering their worse month in 12 years.
[]
Key U.S. non-farm payrolls data due on Friday will also be
closely watched, analysts said.
Among other precious metals, spot silver <XAG=> rose to
$13.24/13.30 an ounce from $13.05.
Buying by silver ETFs has also been key to keeping prices
high. However, the world's largest such fund, the iShares Silver
Trust <SLV>, reported its first outflow since Jan. 5 on Friday,
though its holdings remain at high levels. []
Spot platinum <XPT=> firmed to $1,084.50/1,089.50 an ounce
from $1,071, while spot palladium <XPD=> was at $195.50/199.50
an ounce from $193.50.
(Reporting by Jan Harvey; Editing by Peter Blackburn)
