* European shares fall 1.5 pct as risk appetite fades
* Uncertainty over Fed policy holds gold in range
* GRAPHIC-2016 asset returns: http://reut.rs/1WAiOSC
(Updates throughout, changes dateline, pvs SINGAPORE)
By Jan Harvey
LONDON, April 5 (Reuters) - Gold rebounded by 1 percent on
Tuesday, snapping two days of losses as risk appetite
evaporated, pushing European stocks down 1.5 percent and
knocking the dollar to a 17-month low against the yen.
That helped to reverse a two-day drop in gold that had sent
prices back towards their lowest since late February.
Uncertainty over the outlook for U.S. monetary policy limited
moves, however.
Spot gold XAU= was up 1.4 percent at $1,231.90 an ounce by
0930 GMT, while U.S. gold futures GCv1 for June delivery
gained $14.10 to $1,233.30.
German shares led equities losses after data showed the
biggest fall in German factory orders for six months, suggesting
that Europe's biggest economy is becoming caught up in a global
slowdown. Crude oil prices fell and the euro retreated a quarter
of a percentage point against the dollar. MKTS/GLOB FRX/
"If I look at markets, I would say that there is some
safe-haven buying," ABN Amro analyst Georgette Boele said.
"Gold doesn't want to go lower at the moment, so people are
looking for a reason to buy it, and that seems to be negative
equities."
Gold had posted its biggest quarterly rise in nearly 30
years in the March quarter, rallying 16 percent on fading
expectations of moves by the U.S. Federal Reserve to normalise
interest rates because of concerns over the global economy.
The metal, which is highly exposed to rising rates because
they lift the opportunity cost of holding non-yielding assets,
has been pinned in a range by uncertainty over Fed policy.
Fed Chair Janet Yellen said last week that the U.S. central
bank would proceed cautiously with rate increases.
But Boston Fed President Eric Rosengren on Monday expressed
surprise that futures markets currently imply only one or no
interest rate increases this year, saying that such a prediction
could prove overly pessimistic.
"While the recent turmoil in financial markets has made the
Fed reluctant to hike rates further in the near term, the tight
labour market and resilient core inflation are likely to cause
the Fed to deliver a 25 basis point hike before year-end,"
Societe Generale (PA:SOGN) said in a note.
Among other precious metals, silver XAG= was up 1.7
percent at $15.12 an ounce, platinum XPT= rose 1.8 percent to
$955.40 and palladium XPD= gained 1.2 percent to $556.
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