* Gold climbs higher as euro trims losses versus dollar
* Investors wary due to worries about U.S. bailout plan
* Market awaits news as central bank gold pact ends 4th year
* Platinum down nearly 4 pct on weak demand outlook
(Recasts gold turning to positive, updates prices)
By Humeyra Pamuk
LONDON, Sept 26 (Reuters) - Gold erased losses and climbed
higher on Friday, as increased risk-aversion boosted the metal's
safe-haven appeal and the dollar trimmed gains against the euro.
The market moved in erratic trade, as investors fretted over
the future of a key $700 billion U.S. bailout plan to rescue the
banking system after talks at the White House broke down in
acrimony.
Platinum tumbled almost 4 percent and palladium dropped 2.4
percent on data showing a decline in car sales, highlighting
poor demand prospects for the metal, widely used as a component
in automotive catalytic converters.
Spot gold <XAU=> was up at $883.10/885.10 per ounce by 1229
GMT, a rise of $7.8, or 0.85 percent, compared with the previous
nominal close of $875.70. Earlier, it fell as low as $866.20 an
ounce.
"The main driver right now is the dollar, but also risk
aversion," said analyst Barbara Lambrecht at Commerzbank in
Germany.
The euro <EUR=> climbed to around 1.4648 against the dollar,
after trading around $1.4580 earlier in the session. The dollar
also fell 1 percent against the Japanese yen. <JPY=>
U.S. congressional leaders will try again on Friday to save
the bank bailout plan. Hopes for a speedy deal dimmed when a
group of conservative Republican lawmakers proposed an
alternative plan on Thursday.[]
"We're waiting for the rescue package. There is uncertainity
about when it is coming," she said. "The chances of further bad
news, new financial crisis breaking out are all supportive for
gold."
Fortis <FOR.BR> <FOR.AS> on Friday denied it had liquidity
problems, saying it had a funding base of 300 billion euros and
solid solvency ratios as its shares fell for a fifth straight
day in feverish trading.
Gold has gained about 20 percent since Sept. 11 as
safe-haven demand heightened after the collapse in the share
price of Lehman Brothers <LEHMQ.PK> raised questions about the
stability of the U.S. and global financial sector.
"Everything's just marking time this morning," said Simon
Weeks, managing director of precious metals at the Bank of Nova
Scotia.
"People are waiting to see whether the U.S. lawmakers will
reach any conclusions ... and if they don't we could see gold
rising up again."
Traders also will be waiting to hear how much gold has been
sold so far by the European central banks as Friday marks the
end of the fourth year of the Central Bank Gold Agreement.
In March 2004, 15 European central banks renewed a 1999 pact
to limit their sales over a five-year period to 2,500 tonnes,
with annual sales limited to 500 tonnes, up from 2,000 tonnes in
the first agreement.
Platinum <XPT=> dropped 3.6 percent, dragged down by weak
demand prospects after Thursday's data showed that global output
at Toyota -- the largest automaker in Japan -- declined by 17
percent in August.
"The data suggests the demand from the autocatalyst sector
-- the major use for platinum and palladium -- is going to be
very very soft," Briggs at RBS said.
The metal fell as low as $1,127.50 an ounce and was last at
$1,133/1,153 an ounce, down from the nominal close on Thursday
of $1,172.50.
Spot silver <XAG=> was at $13.32/13.40 versus the nominal
close of $13.16, while spot palladium <XPD=> was at $233/$241
versus the nominal close of $234.
(Reporting by Humeyra Pamuk, editing by Michael Roddy)
