* China devalues yuan by nearly 2 pct amid economic slowdown
* Euro gains vs dollar, European, U.S. shares down
(Updates prices, adds comment)
By Clara Denina
LONDON, Aug 11 (Reuters) - Gold rose to a three-week high on
Tuesday as the dollar reversed gains, global stocks fell and
investors assessed the impact of China's move to devalue its
currency and prop up its economy.
Beijing allowed the yuan to fall to its lowest level in
nearly three years after a run of poor economic data, with the
central bank describing the move as a "one-off depreciation" of
nearly 2 percent. ID:nL3N10M1AH
China's rate decision triggered a sharp but short-lived
retreat in gold XAU= to a session low of $1,093.25 an ounce.
Spot prices rebounded to a three-week high of $1,119 before
trading up 0.3 percent at $1,107.31 an ounce by 1340 GMT.
"Gold is benefiting from fears that this is a new round of
'currency war'," Macquarie analyst Matthew Turner said, adding
that the move increased uncertainties and risks about the global
economy, which tends to be good for gold.
"Gold's best moment this year came in the first few months
when we saw various FX swings, lots of different central banks
cutting interest rates or intervening in their monetary policy,
so probably there is some element of that which has helped the
rally from Monday continue a bit," Turner said.
The metal had gained around 1 percent on Monday on dollar
weakness, after comments from Federal Reserve officials raised
uncertainties about a September rate hike.
Friday's lower-than-forecast U.S. nonfarm payrolls in July
also raised uncertainties over whether U.S. rates will rise next
month.
U.S. gold for December delivery GCcv1 rose 0.5 percent to
$1,109.10 an ounce.
Analysts, however, do not expect China's yuan devaluation to
bolster gold's value in the medium to long term, as this would
have to be followed by a wider round of global devaluations.
"In the longer term, China's devaluation is a slight
headwind for gold, as it makes it a little bit more expensive
from a Chinese perspective," Julius Baer commodity analyst
Warren Kreyzig said.
"It does not add to gold's attractiveness in China and it
doesn't increase the safe-haven status."
The euro hit a 1-1/2 week high against the dollar on
Tuesday, while European and U.S. shares retreated. MKTS/GLOB
Investors have cut their exposure to non-interest-bearing
bullion and raised their bets on the dollar on expectations that
the Fed would lift rates this year for the first time since
2006. The metal lost nearly 7 percent in July, when it also
touched its cheapest since 2010 at $1,077.
Spot platinum XPT= fell 0.4 percent to $980.49 an ounce
and palladium XPD= gained 0.3 percent to $609.22. Silver
XAG= was down 0.1 percent at $15.19 an ounce.