Gold Rises as Bank of England Says Financial System Disrupted

By Nicholas Larkin

Nov. 6 (Bloomberg) -- Gold rose in London after the Bank of England cut interest rates 1.5 percentage points and said global banks are in the worst disruption for almost 100 years.

The central bank lowered the benchmark rate to 3 percent as policy makers tried to contain the damage caused by a recession. The European Central Bank is due to announce a rate decision at 12:45 p.m. London time. Some investors buy gold as a haven in times of financial turmoil.

``Since mid-September, the global banking system has experienced its most serious disruption in almost a century,'' the Bank of England said in a statement. There is a ``very marked deterioration in the outlook for economic activity.''

Gold for immediate delivery rose as much as $8.51, or 1.2 percent, to $748.86 an ounce and traded at $748.70 as of 12:36 p.m. in London. Futures for December were $6.20, or 0.8 percent, higher at $748.60 in electronic trading on the Comex division of the New York Mercantile Exchange.

Among other metals for immediate delivery, silver added 1.6 percent to $10.49 an ounce. Platinum declined $10.50, or 1.2 percent, to $861 and palladium was $7.50, or 3.4 percent, higher at $227 an ounce.

To contact the reporter on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net