* Gold buyers hunt bargains after prices hit 6-week lows
* S&P warns French debt rollover plan may prompt Greek default
* SPDR gold ETF reports 78,000/oz outflow (Updates prices)
By Jan Harvey
LONDON, July 4 (Reuters) - Gold prices rose 0.5 percent in Europe on Monday as investors took advantage of the metal's dip to six-week lows last week to buy into the market, on expectations that the euro will extend gains versus the dollar.
Comments from Standard & Poor's that Greece would likely be in default if it follows a debt rollover plan pushed by French banks also stoked lingering concerns over the stability of the euro zone.
Spot gold was bid at $1,494.59 an ounce at 1138 GMT, against $1,485.80 late in New York on Friday. U.S. gold futures for August delivery rose $12.60 an ounce to $1,495.20.
Trade is likely to be thinned on Monday by the U.S. Independence Day holiday.
Greece last week approved austerity measures needed for it to access another tranche of funding from the European Union and IMF, sparking a relief rally in some assets seen as higher risk, and weighing on gold.
But fears that the euro zone debt crisis may have longer to run have sparked bargain hunting on Monday.
"Market players are using the opportunity to get into gold at a cheap price after the sharp fall last Friday," said Commerzbank analyst Daniel Briesemann.
"The debt crisis in Greece has eased somewhat for the time being, but that does not mean it is solved. The problem is still there -- the EU and Greece have only gained some time."
The euro retreated from one-month highs against the dollar after the report from S&P, while the cost of insuring Greek government debt against default rose.
The euro is expected to draw support, however, from market expectations that the European Central Bank will raise interest rates at a policy meeting later this week.
A consequently weaker dollar would tend to benefit gold, as it makes dollar-priced commodities cheaper for other currency holders, and boosts the metal's appeal as an alternative asset.
DEMAND CURBED
Gold has seen some physical buying returning, especially in the major Asian markets, after its dip below $1,500 an ounce, but this demand has been muted by seasonal factors. Summer is typically a quiet time for gold buying.
"The seasonality of physical demand suggests that gold won't be able to rely on the same depth of physical interest in July as it could in January," said UBS in a note.
"We do expect physical buyers to react to lower prices, but don't expect strong interest until prices get below $1,480 - as they did briefly on Friday, when our physical sales to India picked up to above-average levels."
India is the world's biggest consumer of gold.
Data from U.S. futures regulator the Commodity Futures Trading Commission showed on Friday that managed money had sharply cut bullish bets in COMEX gold futures and options as bullion prices tumbled.
Meanwhile, holdings of the world's largest gold-backed exchange-traded fund, New York's SPDR Gold Trust , fell nearly 78,000 ounces on Friday, data from the fund showed.
ETFs, which issue securities backed by physical stocks of a precious metal, have accounted for a significant proportion of gold investment in recent years.
Among other precious metals, silver was bid at $34.08 an ounce against $33.94. Spot platinum was bid at $1,717.74 an ounce versus $1,734.95, while spot palladium was at $754.97 an ounce against $754. (editing by James Jukwey)