PRECIOUS-Gold rises 2 pct as dollar falls on jobs data

* Traders await non-farm payrolls data due Friday

* Oil weak after 12 percent fall

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By Jan Harvey

LONDON, Jan 8 (Reuters) - Gold rose more than 2 percent on Thursday in a rally sparked by a weaker dollar that tumbled after U.S. weekly data showed the number of Americans remaining on unemployment benefits at a 26-year high.

Traders are now keenly awaiting key U.S. non-farm payrolls data due on Friday. Any further sign of weakness in the U.S. economy is likely to have a significant impact on the dollar, and consequently on gold.

Spot gold XAU= was quoted at $856.05/858.05 at 1445 GMT, against $842.20 an ounce in New York late on Wednesday. Earlier it touched a session high of $864.15.

U.S. gold futures for February delivery GCG9 on the COMEX division of the New York Mercantile Exchange were up $14.90 at $856.60.

"The dollar has weakened, so in theory that should underpin gold," Robin Bhar, a senior metals analyst at Calyon, said. "People are waiting for tomorrow's non-farm numbers."

"The (Friday) jobs data is expected to be bad and that would see an equities sell-off," he said.

The dollar fell against the euro after the U.S. jobs data showed the number of benefit claimants staying on jobless rolls at a 26-year high, although the number of workers filing new claims for unemployment benefits unexpectedly fell. [nL8596895]

Gold's subsequent break higher sparked a technical bounce, analysts said.

Oil prices, which weighed heavily on gold on Wednesday, remained weak after sliding 12 percent in the previous session on data showing a larger than expected rise in U.S. crude stocks. [O/R]

Weakness in the crude market tends to weigh on gold, as the precious metal is often bought as a hedge against oil-led inflation, and because it can dent interest in commodities as an asset class.

"I suspect that if (oil) cracks $40 or lower, then we'll see gold back down to $835/$840," said Bhar.