* U.S. central bank could also taper asset purchases

  * All eyes on when quantitative easing program will end

  NEW YORK, Jan 17 (Reuters) - The Federal Reserve will very likely need to continue its large-scale asset purchases into the second half of this year, since a big improvement in the U.S. labor market is unlikely to have happened by then, a top central bank official said on Thursday.

  " My own sense of this is that it is probably going to be a struggle to see by mid-year a clear indication that the outlook for the labor markets are in a new phase, and it's quite optimistic," Atlanta Fed President Dennis Lockhart said at a conference hosted by Bloomberg.

  " So I would tend to believe that this bond purchasing will need to continue longer into the year," he added. " Whether it goes beyond that, I think, is a question that the committee will take up in trying to weigh efficacy, costs and improvement."

  To speed up the tepid U.S. economic recovery, the Fed is currently buying $45 billion worth of U.S. Treasury bonds and an additional $40 billion of mortgage-backed securities per month under its quantitative easing program, dubbed QE3.

  Lockhart, a centrist monetary policymaker who does not vote on policy this year, later told reporters the Fed could taper its bond buying, and could also selectively reduce purchases of either Treasuries or MBS, when the time finally comes.

* South Africa supply concerns further underpin PGMs

  * Platinum at 3-month top above $1,701/oz

  * Palladium hits 16-month high above $702/oz

  * Gold hovers around $1,691, back above 200-day MA (Recasts and updates prices and market comments to U.S. session, changes byline and dateline, pvs LONDON)

  By Barani Krishnan

  NEW YORK, Jan 17 (Reuters) - Platinum jumped to a three-month high on Thursday, passing the price of gold for the second session in a row after upbeat U.S. economic data boosted optimism about demand for industrial commodities such as platinum, a vital material for automakers.

  Palladium also rallied, hitting 16-month highs, as investors in platinum group metals (PGMs) remained wary about supply shortages after miner Amplats announced this week an overhaul that could cut 400,000 ounces of platinum production in a year.

  The spot price of platinum hit a three-month high of $1,701.50 and was up nearly 0.2 percent at $1,687.74 an ounce at 1830 GMT. Palladium was also up 0.2 percent at $722.81, having matched a Sept. 2011 high of $727.

  Bullion's spot price hovered at just above $1,689, up 0.6 percent. At their session lows, bullion and platinum were almost at parity at around $1,666 an ounce, while at their peak, the difference was $5 in platinum's favor.

  " There is a significant chance of platinum moving back to a normal type of premium of at least $100 (against gold)," INTL Commodities CEO Jeff Rhodes said.

  " Potential for further supply shocks in the PGMs does have all the ingredients for an interesting few weeks in terms of prices," Rhodes added.

  The rally came as upbeat U.S. housing and jobs data sparked a rise in U.S. stocks to five-year highs and cut early losses in the dollar, boosting appetite for risk assets, particularly industrial commodities such as PGMs. The Thomson Reuters-Jefferies CRB index, which tracks 19 commodities, hit a 2-week high.

  EXPLOSIVE DEMAND FOR PGMs

  Platinum and palladium are integral for reducing toxic emissions from cars.

  Analysts say explosive growth in China's automobile industry, and a November report from PGM specialist and refiner Johnson Matthey forecasting the biggest palladium deficit in 12 years, had combined to create the unusual price action.

  Some caution that the rally, driven largely by buying from hedge funds and money managers, might have gone too far.

  Thursday's run-up came in spite of news that miners at Amplats, or Anglo American Platinum, had returned to work after an illegal walkout to protest against the world's top platinum producer's plan to cut 14,000 jobs, close two mines and sell another.

  Since the year began, platinum, which is also popular in jewelry making, has already risen about 10 percent in price and palladium about 8 percent. Thomson Reuters data shows the Relative Strength Index for both metals at above 60, technically putting them in overbought territory.

  The U.S. EFTS Platinum Trust has also posted an increase in its platinum holdings so far in January.

  Many still think prices will push higher.

  " The two markets are up nicely, but it's not like the move has been parabolic. We do think PGMs have more to go," said Mark Luschini, chief investment strategist of Janney Montgomery Scott, a broker-dealer which manages $54 billion in assets.

  GOLD ABOVE 200-DAY MOVING AVERAGE

  Gold moved back above its 200-day moving average this week, a key chart level, after falling below that level in early January when minutes of a Federal Reserve policy meeting showed concern about the scope of U.S. monetary easing.

  " We are still in a period of trial, trying to rebuild the confidence into the gold market," Saxo Bank vice president Ole Hansen said. " We have not breached any critical levels yet to the upside, which could signal that further strength could be coming."

  " While we still stay above the 200-day moving average around $1,662, there is a lot of nervousness in the market," Hansen said. " We've seen big swings at the start of January, we spent the last week trying to recover from that."

  Spot gold was up 0.7 percent at $1,691.14 an ounce, while U.S. gold futures were up 0.5 percent at $1,692.30. Spot silver rose 1.2 percent to $31.80.

  Dealers said physical buying interest for gold has ebbed, after a robust start to the year.

  " What we did see in the gold dips was strong physical demand across the Asian world, including Thailand and India, but since (then), the physical market has definitely slowed," INTL's Rhodes said. (Additional reporting by Clara Denina in London Editing by Grant McCool and David Gregorio)

* Jobless claims fall, housing starts accelerate

  * EBay gains after results beat expectations

  * Bank of America, Citigroup results weigh on financials

  * Indexes up: S& P 0.61 pct, Dow 0.56 pct, Nasdaq 0.55 pct

  By Chuck Mikolajczak

  NEW YORK, Jan 17 (Reuters) - Wall Street rose on Thursday, with the S& P 500 climbing to a five-year intraday high, on improved housing and jobs data along with better-than-expected results from online marketplace eBay.

  The data showed the number of Americans filing new claims for unemployment benefits fell to a five-year low last week, while groundbreaking for homes rose to the fastest pace in four years last month.

  Strength in the housing and labor markets is key to sustained growth and higher corporate profits. Job market improvement helps stimulate consumer spending while a recovery in housing means more purchases of appliances, furniture and other household goods as well as a source of employment.

  " The real estate numbers all look good, sales looked good, prices looked good, housing starts looked good," said Stephen Massocca, managing director at Wedbush Morgan in San Francisco.

  " The only thing that still doesn't look really good in my mind are the employment numbers but even the claims were pretty good and inflation seems to be nonexistent so what's to stop the party from going?"

  The Dow Jones industrial average gained 82.97 points, or 0.61 percent, to 13,594.20. The Standard & Poor's 500 Index advanced 8.31 points, or 0.56 percent, to 1,480.94. The Nasdaq Composite Index rose 17.12 points, or 0.55 percent, to 3,134.66.

  PulteGroup Inc shares gained 4.9 percent to $20.29 and Toll Brothers Inc advanced 2.2 percent to $35.68. The PHLX housing sector index climbed 2.1 percent.

  EBay's shares rose 3 percent to $54.47 a day after it reported holiday quarter results that just beat Wall Street expectations. It gave a 2013 forecast that was within analysts' estimates.

  The S& P is on track for its third consecutive advance, which pushed the index above an intraday peak set in September to its highest since December 2007.

  But gains were tempered by weakness in the financial sector, with Bank of America down 4.3 percent to $11.27 and Citigroup off 3 percent to $41.22 after they posted their results.

  Bank of America's fourth-quarter profit fell as it took more charges to clean up mortgage-related problems. Citigroup posted $2.32 billion of charges for layoffs and lawsuits, while its new chief executive cautioned the bank needed more time to deal with its problems.

  The S& P financial sector index slipped 0.14 percent as the only one of the 10 major S& P sectors to decline.

  S& P 500 corporate earnings for the fourth quarter are expected to rise 2.3 percent, Thomson Reuters data showed. Expectations for the quarter have fallen considerably since October when a 9.9 percent gain was estimated.

  With investors anticipating the current earnings season to be lackluster, their focus will be on the corporate earnings outlook for the months ahead, analysts said.

  Shares of Boeing extended recent declines after the United States and other countries grounded the company's new 787 Dreamliner after a second incident involving battery failure. Boeing shed 0.4 percent to $74.05 and is down 1.5 percent for the week so far.

  Market breadth was solid, with advancers outpacing decliners on the New York Stock Exchange 2,234 to 650, while on the Nasdaq the ratio was 1,602 to 762 in favor of advancing stocks.

* U.S. budget battles loom after " fiscal cliff" deal

  * Potential duty hike set to hurt Indian gold demand

  * Turkish gold imports rose 57 pct in 2012

  By David Brough

  LONDON, Jan 3 (Reuters) - Gold fell from the prior session's two-week peak on Thursday as the dollar strengthened and a stock market rally stalled, with investors focusing on coming U.S. budget talks as euphoria over a vote to avert a fiscal crisis faded.

  World shares struggled for traction on Thursday as investors grew concerned about new political battles looming in Washington over spending cuts, following Wednesday's rally on the back of a deal to avoid the so-called " fiscal cliff" .

  Spot gold was at $1,678.46 by 1446 GMT, down 0.48 percent after having touched a two-week peak above $1,694 in the previous session. U.S. gold futures for December delivery were down $9.80 an ounce at $1,679.00.

  An ADP National Employment Report, which showed private sector employers added more jobs than expected in December, undermined the safe-haven appeal of U.S. government debt on Thursday and added pressure to gold, analysts said.

  Gold's gains have been driven largely by successive rounds of U.S. quantitative easing, which have kept pressure on long-term interest rates and fuelled fears of inflation. Any further easing measures have been explicitly tied to jobs growth.

  " You could argue that the U.S. is creating jobs - and that is another sign that the U.S. economy is in recovery mode," Daniel Briesemann, an analyst with Commerzbank in Germany.

  Closely watched U.S. non-farm payrolls data due on Friday is expected to show the economy added 150,000 jobs last month, after adding 146,000 in November.

  Briesemann said that after the relief over the U.S. deal to avoid a fiscal crisis, financial markets were waking up to the challenges that lie ahead in U.S. budget talks.

  " The euphoria is cooling down somewhat, and market participants are taking a more realistic view of what is ahead," he said.

  U.S. lawmakers left unresolved a sticky issue involving $109 billion in planned spending cuts, promising more political showdowns on the budget in coming months.

  " The deal to avoid a fiscal cliff has booted some problems into the long grass by a considerable distance, but there are still issues out there such as expanding the debt ceiling, which could prove to be difficult negotiations," said David Jollie, strategic analyst at Mitsui Precious Metals.

  HEADWINDS FOR GOLD

  Gold ended up around 7 percent in 2012, the 12th straight year of gains, but faces headwinds this year after posting its worst quarterly performance in more than four years in the last three months of 2012.

  Gold importers in India, the world's biggest buyer of the metal last year, retreated a day after rumours of an import tax hike, as a weaker rupee helped keep prices around their highest level in two weeks.

  " Physical gold demand may be negatively affected in the next few months by the fact that the Indian government is considering raising duties on gold imports even further," Commerzbank said in a note.

  " The aim is to tackle the country's record-high current account deficit, for which - according to India's central bank - gold imports are roughly 80 percent to blame."

  The Istanbul Gold Exchange reported on Thursday that Turkey's gold imports rose by 57 percent last year to 120.78 tonnes from 79.7 tonnes in 2011.

  Among other precious metals, silver was down 0.45 percent to $30.83 an ounce, while platinum firmed 0.69 percent to $1,571.25 and palladium slipped 0.91 percent to $695.97 an ounce.