UPDATE 1-ANZ says allowed to trade China gold futures

* ANZ joins SHFE as gold futures trading member

* Becomes second foreign bank to trade gold futures in China

* Entry would boost contract liquidity, accelerates opening up of gold market (Adds background)

SHANGHAI, Aug 23 (Reuters) - Australia and New Zealand Banking Group's China unit has received regulatory approval to trade gold futures on the Shanghai Futures Exchange, it said on Tuesday, becoming the second foreign bank allowed access to the country's gold futures market.

ANZ's entry to China's gold futures market comes after regulators granted similar membership to HSBC Holdings earlier this month, a move seen as a prelude to further opening up of the gold sector to local and overseas financial institutions.

The opening up of China's gold futures market comes at a time when investment interest in the precious metal hits a feverish pitch, with spot prices striking a series of new highs over the past few weeks on the back of worries over a double-dip recession in the U.S. and crippling sovereign debt in the euro zone.

Chinese regulators keep a tight grip on its commodity derivatives market, but the gold sector is the first to be opened to foreign players.

Industry watchers said the surprise move by the China Banking Regulatory Commission, which governs the SHFE, to grant memberships to two foreign banks in less than a month signals its readiness to quicken the development of the country's financial gold sector.

Spot gold soared to an all-time high above $1,910 on Tuesday, on course for its biggest monthly rise in 29 years, as persistent worries about global economic growth burnished bullion's safe-haven appeal.

An ANZ spokeswoman said the bank would be able to begin trading in a few weeks when it completes some procedural requirements.

Participation from ANZ is set to boost the contract's trading volumes to new highs and help draw more participation from other members that may have stayed on the sidelines due to poor liquidity.

Trading volumes for SHFE's most active December gold futures have already surged about five-fold in August from a month earlier to 1.86 million, thanks in part to HSBC's participation, industry sources said.

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ANALYSIS: HSBC's China gold futures foray a sign of change

For a technical outlook on gold:

link.reuters.com/waw33s

For inflation-adjusted gold price:

r.reuters.com/pun62s

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ANZ is one of the six foreign banks that already have a trading membership on the Shanghai Gold Exchange. Others include the Chinese units of HSBC, Standard Chartered Bank , Bank of Nova Scotia, Credit Suisse and United Overseas Bank .

The SGE allows spot gold transactions as well as forward contracts, but not futures.

Being able to trade both the future and forward contracts for gold would create more hedging and arbitrage opportunities for participants. (Reporting by Fayen Wong; Editing by Jason Subler and Ken Wills)