By Jan Harvey LONDON (Reuters) - Gold rose more than 1 percent in Europe on Monday as the dollar softened against the euro, boosting interest in bullion as a currency hedge, with firmer equity markets also cheering investors. Spot gold climbed to $733.45/735.45 an ounce at 1005 GMT from $723.05 late in New York on Friday. The yellow metal posted its biggest monthly decline in 25 years in October as the firmer dollar pressured prices. "The reason gold is rising is because the dollar is weaker and equity markets are stronger," said Deutsche Bank trader Michael Blumenroth. "The daily ranges are becoming smaller and the market is becoming a little more relaxed now." The dollar has been pressured by a return in risk appetite, analysts said, after recording its biggest montly gain in more than 17 years in October. Gold usually moves in the opposite direction to the U.S. currency, as it is often bought as an alternative investment to the dollar. Traders will be keeping a close eye on a raft of interest rate decisions due later in the week for clues to the direction of the gold market. The European Central Bank on Thursday is due to announce its decision on euro zone interest rates -- expected to be a 50 basis point cut -- while the Bank of England and the Reserve Bank of Australia are also expected to announce cuts this week. "While the currency market remains extremely volatile, all eyes will likely be on the ECB and BoE interest rate decisions later this week," Standard Bank analyst Walter de Wet said. "The market expects both central banks to cut rates by 50 bps (basis points) -- a move which could see the euro and sterling on the back foot." In addition to currencies, traders will also be watching gold's other main external driver, the crude oil market. Prices were softer on Monday, with U.S. crude futures dipping more than $1 a barrel as investors switched their attention back to slowing energy demand. Weaker crude prices tend to pressure gold, which benefits from interest in the metal as a hedge against inflation. PLATINUM, PALLADIUM FIRM The equity markets' firmer tone is also boosting interest in precious metals. MSCI's all-country world stock index was up almost 11 percent last week and rose 1 percent on Monday. Europe's FTSEurofirst 300 rose 0.5 percent in early trade, reflecting gains ovenight in Asia. The platinum group metals were firmer as the market awaited U.S. auto sales figures later in the session. Both platinum and palladium have shed more than half their value in the last three months as investors fretted about the outlook for demand from carmakers, the main consumers of the precious metals. Soft auto sales numbers in recent months have sparked heavy selling of the PGMs, more than half of which are consumed by the car industry each year. "We expect another decline in sales which could put downward pressure on PGM prices," said Standard Bank's de Wet. Spot platinum edged up to $821.50/851.50 an ounce from $813 an ounce late in New York on Friday, while spot palladium firmed to $197/202 from $193.50. Among other precious metals, spot silver was at $10.05/10.15 against $9.81 an ounce.

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