By Susan Thomas and Rujun Shen LONDON/SINGAPORE, Oct 24 (Reuters) - Gold rose more than 1 percent on Monday, as European leaders edged towards a solid plan to resolve the euro zone debt crisis and signs that China's economy is in better shape than feared. In recent weeks gold prices have followed moves in riskier assets, with the precious metal's safe-haven appeal diminishing after wild price swings in the past quarter. Gold gained along with other commodities and world stocks. Spot gold rallied more than 1 percent to $1,658.55 an ounce and was at $1,656.90 by 1118 GMT, after falling more than 2 percent last week. U.S. gold GCcv1 rose more than 1.4 percent to $1,660.5 before easing to $1,656. "The equity markets are rising, the rest of commodities are rising, but the gold price is not coming under pressure. It's also probably pointing to the possibility that the situation could again become critical," Commerzbank analyst Eugen Weinberg said. Some progress was made in Brussels over the weekend, with agreements near on bank recapitalisation and on how to leverage the European Union's EFSF rescue fund to try to stop bond market contagion. But final decisions were deferred until a second summit on Wednesday and sharp differences remain over the size of losses private holders of Greek government bonds will have to accept. The euro retreated from a six-week high against the dollar. "Gold popped up this morning along with most of the commodities markets. The beginning of the EU debt resolution has had a strengthening effect on commodities and equities as a whole," Credit Suisse analyst Tom Kendall said. But technical analysis suggested spot gold could fall to $1,602.74 during the day, said Reuters market analyst Wang Tao. China's vast manufacturing sector picked up moderately in October, snapping a three-month contraction and underscoring the resilience of the world's second-largest economy backed by robust domestic demand. "The China PMI got the market fired up, with a lot of shorts covering as the data suggested that the slowdown in China may have peaked," said David Thurtell, a Citigroup analyst. In the euro zone, the private sector tipped further into decline in October, according to business surveys on Monday that showed the bloc's economy is in serious danger of lurching from stagnation into outright recession. Spot palladium led the rise in precious metals, rising more than 3 percent to $630.75, after suffering a decline of 1.5 percent last week. It was last at $624.18. The metal, used mainly in making autocatalysts for gasoline-powered engines, was still the worst-performing precious metal so far this year, down 21 percent. GOLD INVESTMENT INTEREST LAGS Investors' interest in gold remained lacklustre. Net long positions in U.S. gold futures and options hovered near an 8-month low and total open interest dipped to a three-month low in the week ended on Oct. 18, data from the U.S. futures regulator showed. Holdings in the SPDR Gold Trust stood unchanged at 1,227.511 tonnes throughout last week. The world's largest gold-backed exchange-traded fund has seen a small outflow of about 4 tonnes so far this month, and the holdings were down about 53 tonnes from the end of 2010, according to the fund's website. (www.exchangetradedgold.com) "Gold investor interest has stabilised and physical demand continues to emerge, albeit at softer levels," Barclays Capital said in a note. "We continue to expect gold prices to be cushioned amid the seasonally strong period for demand, and this remains key before investment demand returns to the driver's seat." (Additional reporting by Simon Price; editing by Keiron Henderson and Jason Neely)

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