PRECIOUS-Gold eases towards $1,600/oz ahead of Cyprus vote
* Gold's haven bid overcome by Cyprus' impact on stocks, euro
* SPDR Gold Trust posts biggest daily loss in nearly a month
* European car sales drop 10 pct in Feb, hurting platinum
* Coming up: FOMC starts 2-day meeting
(Updates throughout, changes dateline, pvs SINGAPORE)
LONDON, March 19 (Reuters) - Gold fell back towards $1,600 an ounce on Tuesday as traders took to the sidelines ahead of a vote in the Cypriot parliament on a controversial bailout plan, with a stronger dollar and weak equities starting to hurt prices.
Cyprus's parliament was set to reject a divisive tax on bank deposits in Tuesday's vote, a government spokesman said, a move that would push the island closer to a default and banking collapse.
The proposal, unveiled at the weekend, to partially fund a bailout of the island by taxing bank deposits rattled financial markets and pushed gold to a 2-1/2 week high on Monday as risk averse investors chose the metal as a haven from risk.
It has struggled to maintain those gains, however, as concerns over the plan pressured other assets.
"You have to differentiate between low-level tensions, which impact negatively on the euro, push the dollar higher and undermine gold prices, and a proper crisis," Natixis analyst Nic Brown said. "If you have a genuine crisis, people are searching for any safe haven they can find, and gold prices go up along with a stronger dollar."
"On day one, you had the prospect of a proper crisis... (but) since that initial move higher, you have had more of a low-level concern, so the strengthening of the dollar has actually undermined gold prices."
Spot gold was down 0.2 percent at $1,602.20 an ounce at 1038 GMT, while U.S. gold futures for April delivery were down $2.90 an ounce at $1,601.70. In euro terms, gold held steady at 1,238.30 euros an ounce, after peaking at 1,246.23 the previous day, its highest since February 11.
Uncertainty ahead of the vote kept assets seen as higher risk under pressure. The euro edged back towards the previous session's three-month low versus the dollar, while European stocks eased 0.3 percent.
While gold tends to benefit from rising risk aversion if investors choose the metal as a safe store of value, it has also moved closely in line with stocks and the euro this year.
INVESTMENT INTEREST MUTED
Investment interest in gold remains muted. Selling from gold-backed exchange-traded funds continued on Monday, with the largest, New York's SPDR Gold, reporting its biggest outflow in nearly a month, of 13.5 tonnes. That brought its total outflow this year to 131 tonnes.
Traders are also looking ahead to the latest policy meeting of the Federal Open Market Committee, which begins on Tuesday. Speculation that the Fed could withdraw from its monetary easing policy sooner than expected has pressured gold this year.
"(We) expect the FOMC to reaffirm its commitment to the current quantitative easing policy and to offer no hint that it will alter the policy in the near term," HSBC said in a note.
"The FOMC may decide to update its strategy principles of how to 'exit' from QE at the coming meeting," it added. "Uncertainties surrounding the potential withdraw of QE contributed to gold's sell-off earlier this year. Given this, clarity on the FOMC's QE exit strategy may help ease such concerns and lend support to gold."
Among other precious metals, silver was up 0.1 percent at $28.86 an ounce, while platinum was down 0.4 percent at $1,571.25 an ounce and palladium was down 0.9 percent at $755.72 an ounce.
Gold extended its historically unusual premium over platinum to its highest since Jan 11 at nearly $30, as concerns over Cyprus pressured industrial commodities while lifting gold.
Platinum, which is chiefly used in autocatalysts, has traded at a discount to gold for much of the last year, but reversed that trend in the first quarter on growing optimism that steadier global growth would translate into a demand recovery.
However, carmakers are still struggling, especially in Europe, a key market for platinum-heavy diesel catalysts. Europe's car market shrank 10.2 percent in February, with sales of new vehicles falling to 829,359, according to figures from the Association of European Car Manufacturers.
(Reporting by Jan Harvey; Editing by Veronica Brown and Alison Birrane)