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PRECIOUS-Gold marks over 1-week high; firm dollar curbs gains

Oct 10 (Reuters) - Gold prices inched up to their highest in more than a week on Tuesday, but the gains were capped as the dollar held firm bolstered by expectations of another Federal Reserve interest rate hike this year.

FUNDAMENTALS

* Spot gold inched up 0.2 percent to $1,286.42 an ounce at 0127 GMT, hitting its highest since Sept. 29.

* U.S. gold futures for December delivery climbed 0.3 percent to $1,288.90 per ounce.

* The dollar steadied on Tuesday after edging away from a 10-week high overnight, taking support from underlying expectations that improved prospects for the U.S. economy would prompt the Federal Reserve to raise interest rates later this year.

* Asian shares gained on Tuesday, shrugging off modest losses on Wall Street. The European Central Bank should reduce its asset buys from next year with the aim of ending them altogether, ECB Executive Board member Sabine Lautenschlaeger said on Monday, just weeks before policymakers decide whether to curb stimulus.

* Investor sentiment in the euro zone rose more than expected in October, hitting a 10-year high in its first reading since Germany held national elections two weeks ago, a survey showed on Monday.

* The International Monetary Fund is likely to nudge up its growth forecast for the global economy this week and this means it is high time for policymakers to dial back their ultra-loose monetary stimulus, German government officials said on Monday.

* German industrial output posted its biggest monthly rise in more than six years in August, data showed on Monday.

* British consumer spending jumped in September, but not by enough to halt a year-on-year decline that reflects rising living costs, a survey by payments company Visa showed on Monday.

* Activity in China's services sector grew at its slowest pace in 21 months in September as new orders cooled, a private survey showed, blurring the picture of how the economy is performing heading into a key Communist Party Congress.

* China should continue to open up its economy, reform its exchange rate system and ease capital account controls, Zhou Xiaochuan, governor of the country's central bank, told Chinese business magazine Caijing in an interview.

* The oil market is rebalancing fast and has almost entirely erased the glut of refined products as OPEC sticks to its supply pact, OPEC's secretary general said on Monday.

DATA/EVENT AHEAD (GMT)

0600 Germany Trade balance Aug 0645 France Industrial output Aug 0830 Britain Industrial output Aug 1000 U.S. NFIB business optimism Sep

(Reporting by Apeksha Nair in Bengaluru; Editing by Sherry Jacob-Phillips)