PRECIOUS-Gold eases after rallying on ECB stimulus talk

SINGAPORE, July 26 (Reuters) - Gold edged lower on Thursday
after hitting a three-week high in the previous session, as the
euro retreated from gains sparked by expectations that the
European Central Bank may consider leveraging the region's
rescue fund.

FUNDAMENTALS
* Spot gold inched down 0.2 percent to $1,601.21 an
ounce by 0028 GMT, after rallying nearly 1.5 percent on
Wednesday -- its biggest one-day rise since late June.
* U.S. gold futures contract for August delivery lost
nearly half a percent to $1,600.40.
* European Central Bank Governing Council member Ewald
Nowotny has broken ranks with ECB colleagues, saying that giving
Europe's permanent rescue fund a banking licence to increase its
capacity had merits.
* The euro eased against the dollar on Thursday, after
Nowotny's comments triggered a flurry of short-covering and
helped the euro rebound from a two-year low against the
greenback in the previous session.
* Moody's Investors Service has changed the outlook on the
provisional (P)Aaa long-term rating of the European Financial
Stability Facility (EFSF) to negative from stable, a blow to a
fund that was supposed to backstop struggling EU members.

* Spain paid the second highest yield on short-term debt
since the birth of the euro at an auction on Tuesday, and EU
officials said Greece had little hope of meeting the terms of
its bailout, casting fresh doubt on its future in the euro zone.

* U.S. Treasuries eased marginally on Wednesday as
expectations central banks will have to move further to stem
slowing economic growth spurred some tentative buying of riskier
assets, at the cost of lower-risk U.S. government debt.
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MARKET NEWS
* The S&P 500 fell for a fourth day and the Nasdaq dropped
on Wednesday after a rare earnings stumble from Apple, while
strong results from Boeing and Caterpillar lifted the Dow.

DATA/EVENTS
0800 EZ Money-M3 3m moving av June
1230 U.S. Durable goods orders June
1230 U.S. Jobless claims Weekly
1400 U.S. Pending home sales June

PRICES
Precious metals prices 0028 GMT
Metal Last Change Pct chg YTD pct chg Volume
Spot Gold 1601.21 -2.67 -0.17 2.39
Spot Silver 27.26 -0.06 -0.22 -1.55
Spot Platinum 1392.00 0.35 +0.03 -0.07
Spot Palladium 560.83 -1.17 -0.21 -14.05
COMEX GOLD AUG2 1600.40 -7.70 -0.48 2.14 1887
COMEX SILVER SEP2 27.23 -0.24 -0.88 -2.47 837
Euro/Dollar 1.2126
Dollar/Yen 78.09
COMEX gold and silver contracts show the most active months

(Reporting by Rujun Shen; Editing by Himani Sarkar)