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  2015-08-24T023409Z_1_LYNXNPEB7N027_RTROPTP_3_MARKETS-PRECIOUS_originalMANILA (Reuters) – Gold edged up on Wednesday after falling the most in five weeks the session before as global equities were revived after China cut interest rates and bank reserve requirements to support a flagging economy.

But China’s move appears to have only boosted equities temporarily, with U.S. stock futures resuming their descent and Asian shares slightly lower. Further losses in equities could switch appetite back to safe-haven assets such as gold.

FUNDAMENTALS

Spot gold was up 0.4 percent at $1,144.40 an ounce by 0045 GMT, after losing 1.2 percent on Tuesday. That was bullion’s biggest drop since July 20, and pulled it further away from a recent seven-week high.

U.S. gold for December delivery rose 0.5 percent to $1,143.60 an ounce.

China’s central bank cut interest rates and reduced the amount of reserves banks must hold for the second time in two months on Tuesday amid a stuttering economy and a plunging stock market that has sent shockwaves around the globe.

Palladium was off 0.3 percent at $534.50 an ounce after tumbling more than 6 percent overnight, its steepest fall since April 2013. The metal, mainly used in emissions control systems for cars, trucks and other vehicles, slid to a five-year trough of $528.50 and has lost 11 percent so far this week.

U.S. consumer confidence hit a seven-month high in August and new single-family home sales rebounded in July, suggesting underlying strength in the economy that could still allow the Federal Reserve to raise interest rates this year.

But Ray Dalio, the founder of the world’s largest hedge fund Bridgewater Associates, said the firm believes the next big move by the Federal Reserve will be to loosen U.S. monetary policy, not tighten it.

Gold has failed to rally in the face of China’s stock market crisis as investors, scorched by a brutal end to the market’s 12-year bull run, chose cash and bonds for safety over bullion while they seek clarity on the timing of a U.S. rate increase.

(Reporting by Manolo Serapio Jr.; Editing by Joseph Radford)