* European shares hit three-month high
* Top consumer China launches yuan gold benchmark
(Updates throughout, changes dateline from SINGAPORE)
By Clara Denina
LONDON, April 19 (Reuters) - Gold rose 1 percent on Tuesday,
lifted by a weaker dollar and a 10-month high for silver, which
benefited from robust Chinese buying.
Gold XAU= touched a session high of $1,246.40 an ounce and
was up 0.9 percent at $1,242.35 by 0958 GMT.
Silver XAG= climbed 3.5 percent to $16.78, its highest
since June 2015, before stabilising with a 2.7 percent gain at
$16.65, having risen by 5.7 percent last week, its biggest
weekly jump in 11 months.
"One reason is that the dollar is weakening. Another reason
is that there is heavy buying in silver in Shanghai, and that
has triggered buying in gold as well," said Ronald Leung, chief
dealer at Lee Cheong Gold Dealers in Hong Kong.
The dollar .DXY fell 0.1 percent against a basket of major
currencies.
European equities climbed to three-month highs but that did
not damp demand for gold, often seen as an hedge against risk.
MKTS/GLOB
Gold traders were also watching for comments from Federal
Reserve officials to gauge the outlook for U.S. monetary policy.
"Gold should probably hang on to its gains in the second
quarter because the dollar is likely to stay relatively subdued
with the expectations of U.S. interest rate hikes being pushed
out to the second half of this year," Mitsubishi Corp analyst
Jonathan Butler said.
"That generally means that the yield environment for
non-interest-bearing assets remains fairly favourable."
The Fed raised rates modestly from near zero in December --
its first policy tightening in nearly a decade. While futures
markets imply no further increases until December, Fed
projections suggest there could be two more hikes by year-end.
New York Fed President William Dudley said that U.S.
economic conditions are "mostly favourable" but the Fed remains
cautious on interest rates because threats loom.
Boston Fed President Eric Rosengren, however, said the Fed
is set to incresae rates more rapidly than investors currently
expect.
Top gold consumer China launched a yuan-denominated gold
benchmark on Tuesday as the country took an ambitious step to
exert more control over the pricing of the metal and boost its
influence in the global bullion market.
Among other precious metals, platinum rose 1.9 percent to
$995 and palladium gained 1.6 percent to $572.
The most traded silver contract on the Shanghai Gold
Exchange XAGTD=SGEX jumped as much as 4.3 percent to 3,595
yuan per kilogram ($17.28 per ounce).