PRECIOUS-Gold slides to 2-1/2 week low on upbeat economic data
* European shares draw support from upbeat euro zone data
* Losses deepen on technical selling after breaching $1,300
* Physical demand in China remains quiet
(Updates prices, adds comment)
LONDON, Aug 6 (Reuters) - Gold extended losses to a 2-1/2-week low on Tuesday, as data showing economic growth on both sides of the Atlantic dented the metal's appeal as a safe haven and triggered technical selling.
The figures showed U.S. trade deficit narrowed to a 3-1/2-year low in June, while British businesses boomed and activity at euro zone companies expanded in July for the first time in 18 months.
Spot gold fell as much as 1.9 percent to its lowest since July 18 at $1,279.24 an ounce earlier. It was down 1.7 percent at $1,280.36 by 1402 GMT.
U.S. gold futures for December fell $22.10 to $1,280.30 an ounce.
The falls were exacerbated by technical selling as automatic sale orders were placed by traders below the $1,300 an ounce mark to limit losses, traders said.
"The break below $1,300 again today triggered some stop levels and left room for more technical selling," Commerzbank analyst Daniel Briesemann said.
"At the moment, the momentum is probably skewed to the downside and I wouldn't be surprised to see gold fall a little bit further, maybe $10 or $20 lower, in the short term."
The dollar fell 0.2 percent, while European shares nudged higher after data showed a faster-than-expected recovery in the UK and German economies.
Benchmark U.S. Treasury yields rose to 2.66 percent, below July's two-year peak of 2.755 percent but still higher than at the start of the year.
The returns from U.S. bonds are closely watched by the gold market, given that the metal pays no interest, and as these are viewed as a key indicator of what the U.S. Federal Reserve action will be in September, analysts said.
Gold has lost around 25 percent of its value this year on fears the Fed will curb its monetary stimulus on signs of economic recovery.
The U.S. central bank's tapering would support a higher interest rate environment that diminishes gold's attractiveness.
PHYSICAL DEMAND SLOW
Gold importers in top bullion consumer India remained on the sidelines for a third straight week due to policy uncertainty on shipments, and premiums eased.
Gold prices on the Shanghai Gold Exchange fell 1.4 percent on Tuesday on lower demand, dealers said.
Premiums to London spot prices in Hong Kong - a major supplier to China - have fallen to around $3-$4 an ounce from $5 two weeks ago.
As a gauge of investor sentiment, holdings in SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell 0.2 percent to 917.14 tonnes on Monday.
Gold outflows from exchange-traded products (ETPs) reached $2.6 billion in July, bringing total redemptions for the year at $30.9 billion, according to the latest data from money manager BlackRock.
Silver dropped 1 percent to $19.50 an ounce. Platinum fell 1.8 percent to $1,421.25 an ounce and palladium lost 1.1 percent to $722.97 an ounce.
(Additional reporting by A. Ananthalakshmi in Singapore; editing by Jane Baird and James Jukwey)