LONDON: Gold prices rose more than half a percent on Monday as growing optimism that European leaders will sign off on a rescue deal for Greece lifted the euro, and after China's central bank further loosened monetary policy.

Spot gold was up 0.6 percent at $1,734.19 an ounce at 1210 GMT, while U.S. gold futures for February delivery were up $10.10 an ounce at $1,736.00.

Gold prices are up nearly 11 percent this year, benefiting from a rebound in the euro and expectations that U.S. monetary policy will remain loose, cutting the opportunity cost of holding non-yielding bullion. But analysts say the appeal of other investments could keep gold prices rangebound this year.

"The risks (in Europe) could dissipate modestly in the near term. Certainly, in China, there is a growing acceptance that the government will step in to support growth, and things look like they're stronger than expected in the United States," said Deutsche Bank analyst Daniel Brebner

"Globally, it looks like risk assets are being accumulated by investors, and in that kind of environment, gold should perform reasonably well," he added. "But I would argue it could underperform some of the other metals, the base metals and the white precious metals."

The euro rose 0.5 percent on Monday after China eased monetary policy to stimulate growth and expectations mounted that euro zone policymakers were set to approve Greece's long-awaited second bailout, averting a messy default.

Euro zone finance ministers are expected to approve a second deal for Greece when they meet at 1600 GMT, a move they hope will draw a line under months of turmoil that has shaken the currency bloc.

"The market's attention is to remain fixated on developments in the euro zone as finance ministers gather in Brussels to finalise the details of the second bailout for Greece," said VTB Capital in a note. "We see subdued action today as a positive decision on Greece is pretty much priced in."

Other assets seen as higher risk rallied along with the euro, with European equities reaching their highest in nearly seven months and oil prices up more than $1 a barrel. Safe-haven German government bonds slipped.

MONEY MANAGERS CUT GOLD LENGTH

Money managers in gold futures and options reduced their net long position by about 6 percent in the week of Feb. 14, their first decline in weeks, latest data from the U.S. Commodity Futures Trading Commission showed on Friday.

"The decline in net speculative length affirms our view that the aggressive moves at the end of January were largely as a result of overexcitement after the Fed's dovish announcement (that rates will stay low)," said Standard Bank in a note.

"Consequently, we remain cautious of gold's near-term prospects, and would not be surprised to see further weakness emerge this week."

Holdings of gold-backed exchange-traded funds tracked by Reuters rose by 115,730 ounces last week, a sixth consecutive week of gains, to 70.3 million ounces.

In China, which is challenging India for the title of world's top bullion consumer, the Shanghai Gold Exchange said it will cut trading fees for several of its precious metals contracts to reduce transaction costs, as it sought to keep its fees competitive after a rival bourse cut margins last week.

Silver was up 0.9 percent at $33.52 an ounce, while spot platinum was up 0.9 percent at $1,645.49 an ounce and spot palladium was down 0.4 percent at $692.47 an ounce.

Platinum prices have climbed nearly 18 percent this year, benefiting from supply concerns in major producer South Africa.

The South African miners' union said on Saturday Impala Platinum, the world's second-largest platinum producer, has agreed to re-instate all 17,200 workers who were dismissed following an illegal strike.

The platinum/palladium ratio, or number of palladium ounces needed to buy an ounce of platinum, held near its 2012 high of 2.4 on Monday as platinum continued to outperform.