* Dollar benefits from euro weakness, weighing on gold
* ECB decision, U.S. non-farm payrolls data eyed
* Gold premiums halve in India after Diwali festival
LONDON, Nov 5 (Reuters) - Gold prices fell on Tuesday after a reading of U.S. service-sector business activity came in stronger than expected, lifting the dollar, while the euro retreated ahead of a European Central Bank meeting later this week.
Investors are closely watching U.S. data for clues on when the Federal Reserve will taper its quantitative easing programme, a major driver of higher gold prices during the financial crisis.
Spot gold was down 0.4 percent at $1,308.64 an ounce at 1525 GMT, while U.S. gold futures for December delivery were down $6.00 an ounce at $1,308.70.
"We've seen some quite good economic data out of the U.S., which has led to a rise in the dollar and has weighed on commodity prices, gold especially," Commerzbank analyst Daniel Briesemann said.
"In addition, the ECB meeting is imminent on Thursday. After the very low inflation rate published for October, there are already rumours in the market that the ECB is going to lower interest rates," he added. "These expectations are also helping the dollar gain ground, and weighing on gold."
This week's U.S. data prints will cultimate with key non-farm payrolls numbers on Friday. Ahead of that, speculation is rife that the ECB may signal easier monetary policy or even cut rates at a meeting on Thursday.
That knocked the euro 0.5 percent lower against the dollar on Tuesday, pressuring gold, which is denominated in the U.S. unit.
Speculation that U.S. monetary easing is set to end has pushed gold prices down 20 percent this year.
"The U.S. dollar may gain ground as the currency markets are already being obliged to revisit previous expectations that the Fed will delay tapering QE until the end of Q1 2014," HSBC said in a note.
ASIAN GOLD DEMAND LANGUISHES
Gold demand in major consumer India failed to pick up on Tuesday after a soft week. Consumers bought little gold during Diwali, the Hindu festival of lights, over the weekend, although it is usually a popular occasion for bullion purchases.
Indian gold premiums have halved from last week, traders said, as demand for the metal dropped after festival season.
Premiums in China, which is poised to take over from India as the world's biggest gold consumer, recovered slightly this week but have not seen a big jump.
Among other precious metals, silver was down 0.2 percent at $21.62 an ounce.
Silver's recent underperformance has pushed the gold/silver ratio, which measures the number of silver ounces needed to buy an ounce of gold, to its highest in a month at 60.8.
Spot platinum was down 0.2 percent at $1,446.49 an ounce, while spot palladium was down 0.3 percent at $744 an ounce.
Platinum group metals are being supported by the prospect of renewed mine strikes in South Africa, source of three-quarters of the world's platinum.