* Euro firms versus dollar after 2-1/2 year low * Stock markets recover in Asia, Europe * Platinum rebounds 6 pct, palladium more than 4 pct (Recasts, adds comment, changes dateline, pvs SINGAPORE) By Jan Harvey LONDON, Oct 28 (Reuters) - Gold climbed more than 3 percent in Europe on Tuesday as the dollar softened against the euro and a recovery in equities curbed selling of bullion to cover losses on other markets. Platinum also rallied, cheered by the recovery in gold prices, rising more than 6 percent to a session high of $821.50. Spot gold rose to a session high of $755.00, before slipping back to $743.75/745.75 at 1041 GMT. Late in New York on Monday it was quoted at $729.60 an ounce. European shares rose in early trade to break a five-day losing streak, which had prompted investors to sell gold to cover losses on the equity markets. [ID:nLS105219] "There is some more confidence coming into the system that deleveraging is almost done," said Commerzbank analyst Eugen Weinberg. "There was no reason to liquidate gold except for deleveraging, because it is still a safe haven." "We expect the Fed and the European Central Bank to cut rates over the coming months, and that will put real interest rates into more negative territory. There is a very positive environment behind the gold price." The dollar slipped almost 1 percent against the euro after earlier hitting a 2-1/2 year high versus the single currency. [ID:nT133700] Traders are eyeing the two-day rate-setting meeting of the U.S. Federal Open Market Committee, which is expected to deliver a decision on Wednesday. The Fed is expected to cut lending rates by half a percentage point to 1 percent, the lowest since June 2004, in a bid to calm turmoil in the financial markets. [ID:nFEDAHEAD] "Investors might prefer the sidelines ahead of the Fed's interest rate decision, due tomorrow," said Standard Bank analyst Manqoba Madinane. "With interest rate futures pricing in a 66 percent probability of a 50 basis point Fed rate cut, the greenback's movements today will hog the limelight." Oil prices also ticked higher, rising by $1 in Asian trade, tracking a rebound in stock markets. Firmer crude prices typically support gold, which is often bought as a hedge against oil-led inflation. [ID:nSP356619] PLATINUM, PALLADIUM JUMP Platinum rebounded, climbing by 6 percent to its session high of $821.50, as the softer dollar boosted interest in the precious metal. The metal has been pressured to multi-year lows amid fears over falling demand from carmakers, who account for around 50 percent of annual platinum consumption. Major platinum producer Aquarius Platinum Ltd said in its first-quarter earnings report it has closed a shaft of its Marikana mine for care and maintenance against a backdrop of falling prices. "This might help turn attention back onto supply-side issues," said Tom Kendall, precious metals strategist at Mitsubishi Corp. "Though undoubtedly (there is) more bad news to come from auto sector too in the weeks ahead." Traders are also awaiting results from the world's number three platinum miner Lonmin later in the week. Spot platinum was quoted at $793.50/813.50 an ounce, up from $772.50 in late New York trade on Monday. Palladium climbed more than 4 percent to a session high of $175 an ounce before settling to $170/180 an ounce from $167.50. Spot silver dipped to $8.88/8.98 an ounce from $9.01. Holdings of the world's largest silver-backed exchange-traded fund, the iShares Silver Trust , fell a further 1 pct on Monday and are down 144 tonnes week-on-week. [ID:nLS320073] (Reporting by Jan Harvey; editing by Anthony Barker)

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