* Gold stabilises after falling 1.1 pct last week
* Stock markets, dollar offer little direction
* Physical demand muted; Chinese premiums steady (Updates prices, adds comment)
By Jan Harvey
LONDON, Aug 4 (Reuters) - Gold edged lower on Monday as a rise in banking stocks lifted European shares, but losses were limited after Friday’s surprisingly weak U.S. payrolls data dampened speculation the Federal Reserve will raise interest rates soon.
Spot gold was down 0.2 percent at $1,290.70 an ounce at 1433 GMT, after falling 1.1 percent last week for its first three-week decline since September. U.S. gold futures for December delivery were down $3.10 an ounce at $1,291.70.
A recent run of forecast-beating data, including numbers pointing towards a recovering jobs market, had fuelled talk that the Fed could raise interest rates sooner than expected, increasing the opportunity cost of holding non-yielding bullion.
That sent gold to a six-week low last week, but it recovered after a report on Friday showed U.S. jobs growth slowed in July, pointing to slack in the labour market that will allow the Fed to keep rates lower for longer.
“If interest rates don’t change and aren’t expected to change, the incentive from monetary policy for people to change positioning in gold is relatively limited,” Mitsui Precious Metals analyst David Jollie said. “The physical market isn’t driving us in either direction at the moment either.”
On the wider markets, investors welcomed news that Portugal prevented the collapse of one of its biggest banks, putting some life back into European stocks following last week’s slide and pushing bond yields lower across the board.
The yen and Europe’s major currencies were steady against the dollar on Monday and well off last week’s lows after investors used Friday’s robust but lower-than-forecast U.S. jobs report to rebase after three weeks of gains.
In the physical markets, buying remained subdued in the seasonally quiet summer period, even as many consumers expected prices to decline further.
In top buyer China, local premiums to the global benchmark were steady near $3 an ounce, compared to over $20 earlier this year. Premiums in other parts of Asia have also largely remained steady over the past several weeks.
Silver was up 0.1 percent at $20.29 an ounce, while spot platinum was up 0.1 percent at $1,456.24 an ounce and spot palladium was down 1 percent at $852.47 an ounce.
New car sales in Germany, Europe’s largest auto market, bounced back in July, suggesting further improvement in second-half demand. Registrations of passenger cars rose 6-7 percent year-on-year, an industry source told Reuters on Monday.
“The platinum group metals are an important component used in the fabrication of autocatalysts,” HSBC said in a note. “Further strength in the automotive sector and, thus, PGMs demand is a supportive case for higher prices, in our view.” (Additional reporting by A. Ananthalakshmi in Singapore; editing by William Hardy)