* Gold rose more than 8 percent in January
* Traders still wary over prospect of U.S. rate rise
* U.S. stocks nearly flat (Updates prices, adds comment)
By Marcy Nicholson and Jan Harvey
NEW YORK/LONDON, Feb 2 (Reuters) - Gold prices came off their lows on Monday after unexpectedly weaker U.S. economic data spurred some safe-haven buying.
Gold fell more than 1 percent earlier as buyers cashed in gains after the metal posted its biggest monthly rise in three years in January.
Spot gold was down 0.3 percent at $1,279.51 an ounce at 2:45 p.m. EST (1945 GMT), while U.S. gold futures for April delivery settled down 0.2 percent at $1,276.90 per ounce.
“The release of lower-than-expected U.S. economic data, helped gold cut early losses,” said Howard Wen, precious metals analyst for HSBC Securities in New York, noting earlier losses were due to profit-taking.
“Underlying physical demand remains supportive, most notably from China.”
Gold attracted safe-haven buyers after data showed that U.S. factory activity had cooled in January, suggesting the economy may have entered the new year on a slightly softer footing than expected.
Traders are awaiting more U.S. data this week for further clues on the timing of a U.S. rate rise, which would be the first in nearly a decade. They are particularly focused on non-farm payrolls numbers due to be released on Friday.
“Strong numbers this week from the U.S. could force the market to adjust more towards the FOMC (Federal Open Market Committee) hawkish stance, and that’s negative (for gold),” said Ole Hansen, Saxo Bank’s head of commodity strategy.
“On the other hand, the compression of bond yields and negative yields have most likely caused a rethink about gold, so while I see the risk of a deeper correction below $1,250, I think weakness could be met with additional buying.”
Earlier data on Monday showed U.S. consumer spending recorded its biggest decline since late 2009 in December. U.S. stocks were nearly flat, with the disappointing economic data offset by gains in energy markets.
Traders also will be closely watching the new Greek government’s attempts to persuade its skeptical euro zone partners to accept a new debt agreement. Britain’s finance minister, George Osborne, said on Monday the stand-off over Greek debt was becoming the biggest risk to the global economy.
“(Gold) could struggle now unless the headlines over Greece are so negative that that supports gold further, and we get more safe-haven buying,” Societe Generale analyst Robin Bhar said.
Among other precious metals, silver was up 0.1 percent at $17.23 an ounce. Platinum was down 0.6 percent at $1,228.35 an ounce, while palladium was up 1.9 percent at $783.50 an ounce. (Additional reporting by Manolo Serapio Jr in Singapore; Editing by David Evans, David Clarke and Paul Simao)