* Investors eye EU summit Fri, ECB rate decision Thurs * China slows quickly; needs policy support * Coming up: U.S. factory orders, October; 1500 GMT By Susan Thomas LONDON, Nov 5 (Reuters) - Gold prices were steady on Monday, after posting their sharpest weekly rise in more than a month, as the dollar weakened and on prospects that European Union leaders will finally come up with a firm plan to tackle the euro zone debt crisis. The two-year-old debt crisis has not only pushed a few euro zone nations to the brink of bankruptcy, but also threatened to split the single currency bloc and shake the global economy. French President Nicholas Sarkozy and German Chancellor Angela Merkel will meet to align their positions on closer fiscal integration of the region, before a European Central Bank meeting and a European Union summit later in the week. "I think politicians across the board recognise there is a huge issue here that needs sorting out. Whether Europe can deliver is still an open question," said Natixis analyst Nic Brown. "There is likely to be a fair amount of volatility on the political front this week." Spot gold slipped 0.3 percent to $1,740.64 an ounce by 1059 GMT, after rising nearly 4 percent in the previous week. U.S. gold edged down 0.3 percent to $1,745.60. Gold has shed its traditional status as a safe haven from political and economic volatility in recent weeks, and has tended to move more in line with other commodities, like base metals. For instance, benchmark three-month copper on the London Metal Exchange was steady at around $7,895 per tonne early on Monday. "There is still a lot of risk in Europe, and gold prices are no longer reacting to it they way they used to. Gold prices are reacting primarily to changes in the value of the dollar," Brown said. "Commodities across the board are trading as an asset class and therefore inversely related to the strength of the dollar." The dollar fell against a basket of currencies on Monday, as the euro rose on hopes for a positive outcome from the Dec. 9 EU summit. "Market hopes of progress on Europe should support gold prices for the next few days ahead of an expected ECB rate cut on Thursday," ANZ said in a note. The European Central Bank (ECB) is expected to cut its main interest rate for the second month running, a move that would take it back to a record low of 1.0 percent or lower if the bank decides a 50 basis point cut is needed. China also seems to be in need of monetary policy support. After publishing data showing its vast manufacturing sector shrank in November, an HSBC purchasing managers' index showed the world's second-largest economy slowing quickly. Monetary policy easing raises the inflation outlook and benefits gold, seen as a good inflation hedge. FUNDAMENTALS On the fundamental side, the news flow remains supportive for gold. After last week's coordinated central bank intervention, physically backed exchange-traded funds are registering new inflows again, Credit Suisse said in a note. The official sector also continued to buy. South Korea's central bank said on Friday it bought gold in November for the second time this year to diversify its foreign reserves, joining its counterparts in other countries in seeking protection against financial instability and inflation. Palladium outperformed the precious metals complex, rising 0.8 percent to $647.47 from $642.19 late in New York on Friday, lifted by data showing U.S. auto sales rose 14 percent in November, the fastest rate in almost two years. Palladium is used in auto catalysts. Platinum dipped 0.5 percent to $1,538.99 and silver rose 0.3 percent to $32.65. (Reporting by Susan Thomas; Editing by Alison Birrane)

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