BENGALURU, July 16 (Reuters) - Gold prices nudged higher in early trade on Monday amid a softer U.S. dollar and slightly weaker Asian shares, after sliding to their lowest in seven months in the previous session. FUNDAMENTALS * Spot gold was up 0.1 percent at $1,242.01 an ounce at 0103 GMT, after marking the lowest since Dec. 12 at $1,236.58 on Friday. * U.S. gold futures for August delivery were 0.1 percent higher at $1,242.40 an ounce. * The dollar traded below a 10-day peak, hit in the previous session, versus a basket of six major currencies early on Monday . * Asian shares were lower on Monday, brushing off a firmer Wall Street lead as investor caution dominated ahead of the release of key Chinese economic data. * China is expected to report a modest slowdown in second-quarter economic growth, as the government's efforts to tackle debt risks crimp activity and a trade war with the United States threatens exports. * On the eve of his meeting with Russia's Vladimir Putin, U.S. President Donald Trump rattled allies once more by labelling the European Union a "foe" with regard to trade. * The European Union will open an annual meeting with China on Monday, and will be looking to fend off overtures for an anti-U.S. alliance as China seeks a European counterbalance to U.S. tariffs. * President Trump said on Friday the United States and Britain could secure a "great" post-Brexit trade deal, lavishing praise on Prime Minister Theresa May and contradicting his own withering assessment of her strategy publicised hours earlier. * The Federal Reserve on Friday pointed to "solid" U.S. economic growth during the first half of the year in its semi-annual report to Congress, where it also reiterated that it expected to continue to raise interest rates gradually. * The Bank of Japan this month might concede that inflation could fall short of its 2 percent target for as long as three more years, sources say, in what would be the strongest sign yet of acceptance that its goal cannot be reached quickly. * Hedge funds and money managers cut their net long position in COMEX gold contracts to a 2-1/2-year low in the week to July 10, U.S. Commodity Futures Trading Commission (CFTC) data showed on Friday. (Reporting by Apeksha Nair in Bengaluru; editing by Richard Pullin)
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