SINGAPORE, Sept 29 (Reuters) - Crude oil rebounded, erasing declines in Asian trading on Thursday, as the dollar weakened against major currencies, and bullion rose after declines in the past three weeks attracted buyers of physical gold.
Concern over European nations' approval for expanded powers in the euro zone's rescue fund and Greece's ability to qualify for its next aid package lingered in the market. Copper futures dropped more than 5 percent on mounting worries that Europe's debt problems will plunge the world economy into a second financial tailspin.
"There's expectation that there will be concrete measures to ring-fence the troubles in the eurozone," said Alvin Liew, a senior economist at UOB Research in Singapore. "A lot has been talked about but no agreement is in place."
Investors are eyeing the result of European Union and International Monetary Fund inspectors' visit to Greece to decide whether Athens has done enough to secure a new batch of funds while German Chancellor Angela Merkel worked to defuse a revolt within her government before a vote to enhance the powers of Europe's bailout fund on Thursday.
The worries sent financial markets lower in the previous session. The Dow Jones industrial average dropped 179.79 points, or 1.61 percent, to 11,010.90. The Standard & Poor's 500 Index lost 2.07 percent.
Gold jumped more than 1 percent on Thursday as jewellers rushed to buy after prices dropped early in the session, but declines in other markets could cap gains as uncertainty about a resolution of Europe's debt crisis stoked fears for global growth.
Spot gold added $18.09 an ounce to $1,622 by 0649 GMT, having fallen to a low around $1,582.80. It had dropped to a two-month low of $1,534.49 on Monday -- down from a record of about $1,920 an ounce in early September.
The precious metal is headed for a decline of 11 percent this month, the biggest monthly drop since October 2008.
"The dollar is likely to strengthen on a broad scale, at least short term," said Dominic Schnider, an analyst at UBS Wealth Management in Singapore.
"That's definitely going to be weighing on performance."
OIL STOCKPILES
Brent LCOc1 rose as much as 0.4 percent to $104.26 a barrel and was trading at $103.89 by 0703 GMT, after earlier touching a trough at $102.35. It is poised for a monthly drop of 9 percent and a decline of about 7 percent this quarter.
U.S. crude CLc1 gained 30 cents to $81.51 a barrel. Futures have fallen about 15 percent this quarter, the worst drop since the last quarter of 2008.
Crude inventories in the United States, the world's biggest oil consumer, increased 1.92 million barrels to 340.96 million in the week to Sept 23, according to Energy Information Administration data on Wednesday. Analysts polled by Reuters had projected an 800,000-barrel build, on average.
The 19-commodity Reuters-Jefferies CRB index lost 2.5 percent on Wednesday, snapping two days of gains. The index is headed for its biggest monthly decline since October 2008, when the Lehman Brothers collapse sent the index plunging 22 percent as investors fled commodities.
POSITIVE FOR DOLLAR
Three-month copper on the London Metal Exchange dropped 5.9 percent to a session trough of $6,821 a tonne on Thursday.
The contract collapsed to the lowest close in 13 months in the previous session, losing more than 7 percent at one point.
LME copper faces a support at $6,800 per tonne, and may rebound moderately to $7,000 before falling to $6,400, according to Reuters technical analyst Wang Tao.
Investors are watching data including German unemployment, euro zone economic sentiment, U.S. final gross domestic product figures and initial jobless claims, for signs of a recovery in consumption .
"Any bouts of risk aversion, or hiccups and hurdles in resolving the euro debt crisis, will be positive for the dollar," UOB's Liew said.
The dollar index edged down 0.2 percent on Thursday but is headed for its biggest monthly gain so far this year.
Soy declined for a second day, with November soy losing 0.3 percent to $12.19-1/2, heading for a second quarter of decline as prospects of a slowing global economy dimmed the demand outlook.
December wheat rose 0.5 percent to $6.41-3/4 per bushel, while December corn climbed 0.2 percent to $6.32 per bushel. On Wednesday, corn fell 3 percent to a nearly three-month low, while soybeans took their biggest fall in six months.
"There are still no official details of the rumoured European rescue package, and the markets appear to be losing patience," Luke Mathews, a strategist at Commonwealth Bank of Australia in Sydney, said in a report.
(With additional reporting by Carrie Ho, Naveen Thukral; Editing by Clarence Fernandez)
