PRECIOUS-Gold stuck in ranges 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

LONDON, March 6 (Reuters) - Gold was steady on Wednesday, underpinned by expectations central banks would maintain ultra-loose monetary policy but struggling to break higher as investors favoured higher-yielding assets on the back of strong U.S. economic data.

Rallying stock markets grabbed the attention of investors, with European shares hitting their highest since the 2008 financial crisis on signs the U.S. economy is improving and hopes central bank stimulus would fuel a broader economic recovery.

U.S. private employers added a larger-than-expected 198,000 jobs in February, bolstering hopes that hiring is improving in the world's leading economy, a private report showed ahead of official U.S. jobs data due on Friday.

U.S. stock futures extended gains on the news, setting up the Dow Jones Industrial Average to start the day stronger after hitting an all-time high on Tuesday. The dollar index inched up 0.1 percent.

"We've clearly been in a period of sideways trading in the last few sessions and there are enough other bits and pieces going on to stop gold selling off completely in the short term, but risk-on is very much the order of the day," said Simon Weeks, head of precious metals at ScotiaMocatta.

"Gold is going to be seen as a source of cash to fund the risk-on environment."

Spot gold was up 0.1 percent at $1,576.50 an ounce by 1402 GMT, within a $1,564-$1,587 range it recently established. U.S. gold was up $1.4 an ounce at $1,576.30.

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 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.

That, combined with signs of a strengthening U.S. economy and China's plans for record government spending to sustain growth have given investors fresh confidence to take risk.

Markets have so far shrugged off the possible economic impact from the $85 billion U.S. government spending cuts triggered last week as lawmakers remained deadlocked over how to reduce the country's deficit.

"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.

SOUTH KOREA BUYS GOLD

However, analysts said the recent falls in gold had encouraged buying from Asian customers and central banks.

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.

Silver was up 0.3 percent to $28.75 an ounce. Spot platinum was flat at $1,585.25 an ounce, while spot palladium was up 0.5 percent at $736.97 an ounce.