MARKETS-PRECIOUS (UPDATE 3) * Prices consolidate after biggest one-day rise in 2 months * Debt woes support gold after Moody's cuts Portugal rating * Coming up: ECB rates announcement on Thursday By Jan Harvey LONDON, July 6 (Reuters) - Gold prices held near $1,515 an ounce in Europe on Wednesday, consolidating after the previous session's 1.3 percent rise, with Moody's decision to cut Portugal's credit rating to junk stoking concerns over euro zone debt. Spot gold was bid at $1,515.95 an ounce at 1016 GMT, against $1,515.70 late in New York on Tuesday. U.S. gold futures for August delivery were up $3.90 at $1,516.60. The metal posted its biggest one-day rise since early May on Tuesday as risk aversion hit financial markets after weak euro zone data and a Moody's report saying the scale of problem loans at local governments in China may be bigger than previously thought. It extended gains after Moody's became the first ratings agency to cut Portugal's credit standing to junk, warning the country may need a second round of rescue funds before it can return to capital markets. The markets are now taking a breather as traders digest the latest price rise, analysts said. "The issues surrounding the euro zone are going to last for quite some time, so they are something that markets are going to have to be dealing with on an ongoing basis," said Macquarie analyst Hayden Atkins. "All these issues are keeping the market well bid at current prices. But there is no obvious catalyst to really give things another kicker again." Bonds issued by the euro zone's weaker countries came under renewed pressure on Wednesday after the Moody's cut, which raised fears Portugal would also eventually be pushed into a debt restructuring. European shares slipped, snapping a seven-day winning streak, after the Moody's downgrade sparked selling in risky assets in the region and pressured the euro against other major currencies. Usually a consequently stronger dollar would put pressure on gold. Risk aversion is currently outweighing much of the currency markets' influence, though dollar strength is limiting further gains, analysts said. ECB MEETING AWAITED Traders are closely watching the European Central Bank's next policy meeting on Thursday. The ECB is set to hike euro zone interest rates to 1.5 percent and to show no sign of softening its hard-line stance that Greece must not be allowed to default on its debts. Expectations that the ECB will hike rates more quickly than the Federal Reserve have helped lift the euro more than 7 percent against the dollar so far this year, supporting gold. From a technical perspective, the precious metal is facing tough resistance after its latest break higher. "We see resistance at $1,518 and $1,528 which represent the 50 percent and 61.8 percent of our June drop from $1,558 to $1,479," said ScotiaMocatta in a note. "We believe the market will maintain its bearish slant while the metal holds below $1,518 but will shift neutral on a close back above that level." On the supply side of the market, investors were awaiting fresh developments in a strike in Freeport-McMoran's Indonesia mine as well as the threat of a strike in South Africa's main gold mines. Among other precious metals, silver was bid at $35.76 an ounce against $35.45, spot platinum was bid at $1,733.35 an ounce versus $1,737.05, and spot palladium at $773.47 an ounce against $770.38. "The very strong fundamental outlook for palladium, with constrained supply and steadily growing demand leading to rising market deficits in the medium term, (will) likely drive renewed investor interest, particularly against a very positive technical background for prices," said VTB Capital in a note.

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