(Reuters) - Gold rose on Thursday to around $1,700 an ounce after its decline to one-month lows this week triggered some bargain hunting, and the euro's recovery from seven-week lows against the dollar further supported bullion.

Gold's rise echoed European equity markets, which inched up on Thursday, also driven by technical factors and bargain hunting after shares fell 7 percent in five sessions.

Spot gold last traded at $1,697.19 an ounce at 1247 GMT, up 0.3 percent on the day after hitting a session low of $1,680.54 on Wednesday. The price is still set for a second consecutive weekly drop.

It's been slightly more bullish since London opened, London's come in and taken us back over $1,700, as a bit more stability has come through in the FX markets, said Credit Suisse precious metals analyst Tom Kendall.

The euro is up a touch against the dollar, sentiment more broadly across equities and commodities is slightly more positive today, he said, adding there has been a slight pick-up in physical and private bank buying.

The euro recovered slightly to trade at $1.3375 from Wednesday's lows but positive German economic data is unlikely to reassure investors, especially after Berlin's most disappointing bond auction in 10 years on Wednesday.

The dollar lost 0.3 percent against a basket of currencies .DXY. Thursday's Thanksgiving holiday in the United States could suppress trading volumes in both currency and commodity markets, meaning gold may behave more erratically.

EURO ZONE IN FOCUS

Investors will look to German Chancellor Angela Merkel, French President Nicolas Sarkozy and new Italian Prime Minister Mario Monti for clues to the direction of the euro zone at a meeting in Strasbourg.

It is expected Sarkozy will pressure the German leader on her reluctance to allow the European Central Bank to take a more active role in the euro zone crisis.

Merkel has been firm in her view that the European Central Bank should not act as a lender of last resort but Germany's bond auction showed even the bloc's biggest economy is not immune from the crisis.

The threat to the euro from the crisis increases the chances for gold to ease further, analysts said.

That the price slump in gold is mainly U.S. dollar-driven is evident from the fact that gold calculated in euros has been able to rise, Commerzbank said in a note.

Obviously gold is continuing to be sold to generate liquidity and compensate for losses in other asset classes. If equity and commodity markets continue to remain under pressure, this trend is initially likely to continue.

Gold priced in euros was roughly flat on the day on Thursday, trading around 1,268.05 euros an ounce, but has risen by nearly 2 percent in the last three trading days, its strongest three-day stretch of gains in two weeks.

It wouldn't surprise me if we still have another shift lower to test the big line of support, which is the 200-day moving average, which is getting close to $1,600 level, Credit Suisse's Kendall said of the dollar price of gold.

Gold hit a 2-1/2 month low of $1,534.49 in late September, which was roughly the location of the 200-day moving average.

Silver gained in line with gold. A senior official at ScotiaMocatta, a bullion dealer, said on Thursday Indian imports of silver would be marginally lower this year compared to last year.

India is a leading consumer of silver and the world's largest consumer of gold.

Spot silver was up 1.0 percent on the day at $31.98 an ounce, but remained on track for a 6.3 percent decline in November.

Platinum was up 0.3 percent at $1,545.74 an ounce and palladium was up 0.3 percent at $584.97.