PRECIOUS-Gold holds firm as stock markets rally
* Global stocks rise on hopes for U.S. recovery, easy money
* Physical buying in Asia not enough to offset ETF outflows
* South Korea's central bank buys 20 tonnes of gold
* Coming up: U.S. ADP employment survey, U.S. factory orders
LONDON, March 6 (Reuters) - Gold steadied on Wednesday, underpinned by expectations central banks would maintain ultra-loose monetary policy, but struggling for fresh gains as investors favoured higher-yielding assets.
Strong stock markets grabbed the attention of investors, with European shares hitting their highest since the 2008 collapse of Lehman Brothers on Wednesday on hopes central bank stimulus would spur a broader economic recovery.
The European Central Bank, the Bank of England and the Bank of Japan are all expected to stick to ultra-easy monetary policy at meetings on Thursday, following assurances by Federal Reserve officials that their stimulus programme remains in place.
Successive rounds of U.S. quantitative easing have in recent years weighed on the dollar and buoyed gold, which benefits from ultra-low interest rates and fears over inflation. But as these measures start to stimulate a better performance from other assets, gold could lose some ground, analysts said.
"The U.S. government is beginning to return to long-term fiscal sustainability and this is something which potentially undermines the rationale for holding gold," said Nic Brown, head of commodity research at Natixis.
"If the dollar is going to be a safe haven asset of choice in the future, then why would you own gold instead?"
Spot gold was little changed at $1,574.96 an ounce by 1101 GMT, within a $1,564-$1,587 range it recently established. U.S. gold was down 50 cents an ounce at $1,574.40.
Spot gold has fallen nearly 6 percent so far this year and is down about 18 percent from a record high of $1,920.30 an ounce hit in September 2011.
The Dow Jones industrial average hit a record high on Tuesday on the back of data showing quickened growth in the huge U.S. services sector. Strength in equity markets helped the dollar index inch up 0.1 percent.
Market participants are now awaiting the U.S. ADP survey for private-sector job creations in February, due at 1315 GMT.
The survey comes ahead of the official U.S. non-farm payroll figures due on Friday, and should give an indication of the strength of the recovery in the world's leading economy.
The Fed has pledged to stick with its stimulus programme as long as U.S. unemployment remains high. It last stood at 7.9 percent.
"Any suggestion that QE3 will be scaled back because unemployment is falling in the U.S. has potential to push gold prices lower," Natixis' Brown cautioned.
SOUTH KOREA BUYS GOLD
South Korea's central bank said on Wednesday it bought 20 tonnes of gold in February in the fifth purchase of the metal in less than two years, taking total holdings to 104.4 tonnes.
But continued outflows from gold-backed exchange-traded funds underscored the sober sentiment for the precious metal and overshadowed physical purchases by Asian consumers.
SPDR Gold Trust, the world's biggest gold ETF, said its holdings dropped on Tuesday in the eleventh session of straight declines to a 16-month low of 1,244.855 tonnes, signalling investor selling.
"South Korea's gold purchases - and probably those of other central banks - were only able to offset February's outflows from gold ETFs in part," Commerzbank said in a note. "The outflows are continuing up to the current edge, yesterday seeing further outflows of 8.5 tonnes."
"For the first time since mid-September, holdings of gold ETFs have fallen to below 2,500 tonnes again. For as long as this trend persists, the gold price is hardly likely to achieve any significant recovery."
In India, the biggest consumer of the precious metal, gold importers were awaiting bigger price falls in the metal before stepping up purchases as they remained wary of volatility in the rupee.
Among other precious metals, silver was flat at $28.67 an ounce. Spot platinum was little changed at $1,585.99 an ounce, while spot palladium was up 0.2 percent at $735.22 an ounce.