PRECIOUS-Gold rises 1% as virus fears overshadow firmer equities

(Updates prices)
* BoE cuts interest rates, Britain announces budget splurge
* U.S. Treasury yields and dollar drift lower
* More than 119,000 people infected by coronavirus globally

By Harshith Aranya
March 11 (Reuters) - Gold rose 1% on Wednesday, regaining
some ground after the previous day's near 2% slide, as fears
over the economic toll of the coronavirus outweighed an uptick
in equity markets following an interest rate cut from the Bank
of England.
The BoE on Wednesday joined other central banks in cutting
rates, raising hopes for more coordinated monetary and fiscal
stimulus. MKTS/GLOB
Looser monetary policy, while stimulating economic growth,
tends to benefit gold, as it cuts the opportunity cost of
holding non-yielding assets.
Spot gold XAU= was up 1% at $1,664.81 per ounce by 1244
GMT, while U.S. gold futures GCv1 gained 0.4% to $1,666.90.
"Gold remains driven by developments in global financial
markets, which are driven by the further development of the
coronavirus (outbreak)," Commerzbank analyst Carsten Fritsch
said.
The BoE cut rates by half a percentage point, while the
British government is also set to spend billions extra in its
budget to minimize the economic impact from the outbreak, which
has infected more than 119,000 globally. European stock markets rose for the first time in five
sessions following the BoE cuts. .EU MKTS/GLOB
"All of a sudden, the BoE comes up with emergency rate cut
and there's also news from Italy on a complete lockdown, travel
restrictions from several European countries and cancellation of
big events - so it's getting bigger and bigger," Fritsch said.
The European Central Bank too is expected to unveil new
stimulus measures on Thursday. The U.S. Federal Reserve slashed
its benchmark rates in an emergency move last week. White House and Congress meanwhile negotiated stimulus
measures on Tuesday, although there was no immediate sign of a
deal, with the resulting uncertainty also contributing to gold's
gains on Wednesday. Further supporting bullion, U.S. 10-year Treasury yields
resumed their slide back towards Monday's record low, while the
dollar .DXY fell. US/ USD/
Holdings in the world's largest gold-backed exchange-traded
fund, SPDR Gold Trust GLD , held near their highest in more
than three years. GOL/ETF
"ETFs are reflecting investment," said Soni Kumari, a
commodity strategist at ANZ, adding that the lower interest rate
environment and safe-haven demand were boosting inflows.
Elsewhere, palladium XPD= fell 2.2% to $2,367.95 per
ounce.
"It was quite surprising that palladium was able to
withstand massive headwinds from coronavirus for such a long
time, so now it feels the pain of it," Commerzbank's Fritsch
said, adding the autocatalyst metal will be weighed down by
declining car sales.
Platinum XPT= was up 0.8% at $876.13. Silver XAG= rose
0.6% to $16.96 per ounce.