Gold near seven-week high after best week since Jan

MANILA (Reuters) - Gold hovered near its highest level in almost seven weeks early on Monday after scoring its biggest weekly gain since January as worries over a slowing Chinese economy spurred appetite for safe-haven assets.

FUNDAMENTALS

Spot gold was little changed at $1,160.50 an ounce by 0047 GMT, after touching a high of $1,165.11 in early deals.

Gold rose to as much as $1,168.40 on Friday, its highest since July 7. It gained more than 4 percent last week, the most since mid-January.

U.S. gold for December delivery was flat at $1,160.40 an ounce.

Markets will be watching for China's next move as signs of a slowdown in the world's second-largest economy stack up, raising expectations it will act to stoke growth.

Data on Friday showed activity in China's factory sector shrank at its fastest pace in almost 6-1/2 years in August as domestic and export demand dwindled.

On Sunday, China allowed pension funds managed by local governments to invest in the stock market for the first time, potentially channelling hundreds of billions of yuan into the country's struggling equity market.

Federal Reserve officials planning to lift interest rates as soon as September have been encouraged by solid U.S. jobs growth, but inflation holds the key to how far the Fed can go in moving rates away from zero.

Top aides to the leaders of North and South Korea negotiated overnight and into Monday morning in a marathon bid to try to ease tensions involving an exchange of artillery fire that has brought the peninsula to the brink of armed conflict.

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