Gold heads for biggest weekly loss since May

Gold regained strength on Friday, but was heading for its biggest weekly loss in a month after fears of a global economic slowdown hit commodities and prompted investors to seek safety in the U.S. dollar.

Thursday's data showing Chinese, European and U.S. manufacturing activity had slowed highlighted fears about weaker global growth, just a day after the Federal Reserve disappointed investors who had hoped for a more aggressive policy to stimulate the economy.

Fundamentals

* Spot gold added 67 cents to $1,566.09 an ounce by 0023 GMT on bargain hunting. It had fallen 2.5 percent on Thursday -- its biggest one-day drop since late February after the Fed stopped short of launching another round of quantitative easing.

* U.S. gold futures for August delivery rose $1.50 an ounce to $1,567.00.

* The safe-haven U.S. dollar hovered at 1-1/2 week highs against a basket of major currencies on Friday, staying buoyed following a long-anticipated credit ratings downgrade of the world's major banks by Moody's.

* Ratings agency Moody's downgraded many of the world's biggest banks on Thursday, lowering credit ratings of 15 companies by one to three notches.

Market news

* Japan's Nikkei share average dropped 1 percent in early deals on Friday as data showing U.S. manufacturing grew at its slowest pace in 11 months in June added to concerns about weaker growth in Europe and China.

* Commodities crumbled for a second day in their biggest sell-off this year on Thursday, with oil, corn and copper tumbling by 3 percent or more after new global economic data darkened the demand outlook for raw materials.

* Physical gold traders in India, the world's biggest buyer, kept to the sidelines on Thursday seeking bigger falls in prices to book deals, even as the yellow metal fell more than half a percent.