PRECIOUS-Gold climbs with euro on hopes for Greek deal

* Euro climbs on hopes for Greek bailout, China move
* European shares hit 7-month high, German bonds ease
* U.S. markets closed for national holiday

(Updates prices)
By Jan Harvey
LONDON, Feb 20 (Reuters) - Gold prices rose 0.6
percent on Monday as the euro rallied on optimism that European
leaders will sign off on a rescue deal for Greece and as China's
central bank further loosened monetary policy.
Spot gold was at $1,733.73 an ounce at 2 p.m. EST
(1900 GMT), while U.S. gold futures for February delivery
were up $9.60 an ounce at $1,735.50. COMEX trading volume of
42,000 lots was about one-quarter its daily norm due to the U.S.
Presidents Day holiday.
Gold prices are up nearly 11 percent this year, benefiting
from a rebound in the euro as well as expectations that U.S.
monetary policy will remain loose, which cuts the opportunity
cost of holding non-yielding bullion.
"It seems today that euro zone finance ministers will
approve the 130 billion euro bailout package for Greece, and
that should reduce fear in the financial markets and have a
positive impact on the euro in particular," said Peter Fertig,
consultant at Quantitative Commodity Research.
"The outlook (for gold) remains positive if we get a
solution to the Greek crisis."
The euro rose 0.5 percent on Monday on expectations
that euro zone policymakers were set to approve Greece's
long-awaited second bailout, averting a messy default, and after
China eased monetary policy to stimulate growth.
Euro zone finance ministers are expected to approve a second
deal for Greece at their meeting which began at 1600 GMT, a move
they hope will draw a line under months of turmoil that has
shaken the currency bloc.
Other assets seen as higher risk rallied along with the
euro, with European equities reaching their highest in nearly
seven months and oil prices up more than $1 a barrel. Safe-haven
German government bonds slipped.
While better appetite for risk is currently supporting gold,
analysts say the appeal of other investments could keep prices
rangebound this year.
"The risks (in Europe) could dissipate modestly in the near
term. Certainly, in China, there is a growing acceptance that
the government will step in to support growth, and things look
like they're stronger than expected in the United States," said
Deutsche Bank analyst Daniel Brebner.
"Globally, it looks like risk assets are being accumulated
by investors, and in that kind of environment, gold should
perform reasonably well," he added. "But I would argue it could
underperform some of the other metals, the base metals and the
white precious metals."

MONEY MANAGERS CUT GOLD LENGTH
Money managers in gold futures and options reduced their net
long position by about 6 percent in the week of Feb. 14, their
first decline in weeks, latest data from the U.S. Commodity
Futures Trading Commission showed on Friday.
"The decline in net speculative length affirms our view that
the aggressive moves at the end of January were largely as a
result of overexcitement after the Fed's dovish announcement
(that rates will stay low)," Standard Bank said in a note.
"Consequently, we remain cautious of gold's near-term
prospects, and would not be surprised to see further weakness
emerge this week."
Holdings of gold-backed exchange-traded funds tracked by
Reuters rose by 115,730 ounces last week, a sixth consecutive
week of gains, to 70.3 million ounces.
In China, which is challenging India for the title of
world's top bullion consumer, the Shanghai Gold Exchange said it
will cut trading fees for several of its precious metals
contracts to reduce transaction costs, as it sought to keep its
fees competitive after a rival bourse cut margins last week.
Silver rose 1 percent at $33.56 an ounce, while spot
platinum gained 0.6 percent to $1,639.82 an ounce and
palladium slipped 0.5 percent to $691.78 an ounce.
Platinum prices have climbed nearly 18 percent this year,
benefiting from supply concerns in major producer South Africa.
The South African miners' union said on Saturday Impala
Platinum, the world's second-largest platinum producer,
has agreed to re-instate all 17,200 workers who were dismissed
following an illegal strike.
The platinum/palladium ratio, or number of palladium ounces
needed to buy an ounce of platinum, held near its 2012 high of
2.4 on Monday as platinum continued to outperform.

(Reporting by Jan Harvey and Jonathan Leff; Editing by Anthony
Barker and Derek Caney)