PRECIOUS-Gold gains as poor euro zone data stokes risk-off sentiment

* Gold up 0.8 percent so far this week

* Platinum up about 3 pct so far this week

* March euro zone business growth worse than expected -PMI (Updates prices)

March 22 (Reuters) - Gold prices rose on Friday as disappointing economic data from the euro zone added to concerns of a slowdown in global growth and drove investors away from riskier assets.

Spot gold was up 0.2 percent at $1,311.71 per ounce by 1300 GMT, while U.S. gold futures gained 0.3 percent to $1,311.2.

“It is about the weakness in the economy in the euro zone and outlook for interest rates which makes holding gold more attractive,” said Quantitative Commodity Research analyst Peter Fertig.

Businesses across the euro zone performed much worse than expected this month as factory activity contracted at the fastest pace in nearly six years, hurt by a big drop in demand, a survey showed.

“The data...was weaker than the consensus. This is weighing on interest rates in the euro zone and bond yields,” Fertig said.

Germany’s benchmark 10-year government bond yield turned negative for the first time since October 2016, while European stocks wiped out early gains after the data was released.

Gold prices rose to their highest since Feb. 28 on Thursday at $1,320.22. Despite paring some of those gains, they were still on track for a third straight weekly gain, up about 0.8 percent so far.

“Gold could not break above $1,320 on the upside and saw a correction. The current trading range seems to be between $1,305-$1,320,” said Afshin Nabavi, senior vice president at MKS SA.

“I still believe that with the geopolitical and the (uncertain) Brexit situation, we may be heading higher.”

EU leaders have given Prime Minister Theresa May a two-week reprieve, until April 12, before Britain could lurch out of the EU if she fails to persuade lawmakers to back the withdrawal treaty she concluded with Brussels.

The Fed’s decision earlier this week to bring its three-year drive to tighten monetary policy to an abrupt end, abandoning projections for any interest rate hikes this year.

Lower interest rates reduce the opportunity cost of holding non-yielding gold and weigh on the dollar.

Among other precious metals, spot palladium dipped about 2.5 percent to $1,567.60 per ounce, after touching an all-time high of $1,620.53 in the previous session.

Concerns about a deep supply deficit and increased speculative buying interest have pushed palladium prices to record levels, analysts said.

Silver was down 0.3 percent at $15.42 per ounce, and platinum fell 0.6 percent to $853.51 per ounce, but was up about 3 percent so far this week. (Reporting by Sumita Layek in Bengaluru; Editing by Kirsten Donovan and Louise Heavens)