GOLD rose in European trading after a report that sales by Germany’s central bank would be capped at 600 tonnes within five years.

Germany, with the second biggest gold reserves after the US, is negotiating limits for gold disposals between 2004 and 2009 as part of a global sales agreement.

Traders were heartened by reports that the Bundesbank was considering selling between 400 and 600 tonnes, less than many had feared. At the end of last month the Bundesbank had 3,439.5 tonnes in its vaults, according to the World Gold Council.

Bullion rose by 50 cents to trade at about $375 a troy ounce, clawing back some of the losses since the start of this month. Gold has suffered as the dollar has weakened against other major currencies during the past fortnight.

A five-year world agreement struck by central banks in 1999 to restrict sales of gold reserves helped to underpin prices, which rose to a near seven-year high last month. Gold bugs believe that bullion could hit $400 shortly.

The pact puts a ceiling of 2,000 tonnes on total sales over a five-year period by central banks. They control an estimated 25 per cent of all gold above ground. Dealers hope that a similar pact will be signed before the present accord expires next September.

• The board of Ghana’s Ashanti Goldfields last night recommended a sweetened $1.43 billion bid from South Africa’s AngloGold over an offer from the London-listed Randgold Resources.