COMMODITIES-Oil leads rise on Greek relief; rally seen short

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* Greece to forge new govt after pro-bailout parties win

* Market optimism in check given other Europe worries

By Manolo Serapio Jr

SINGAPORE, June 18 (Reuters) - Commodities rose on Monday on relief after pro-bailout parties triumphed in Greece's election, averting another financial turmoil, but the rally was seen losing steam as investors realised it would take more to resolve Europe's debt crisis.

Oil, copper, wheat and rubber jumped when markets opened as political parties supporting debt-stricken Greece's bailout won by a narrow lead at Sunday's election, fueling appetite for riskier assets. A victory for radical leftists would have led to a Greek exit from the euro zone, plunging the single currency bloc into chaos.

Gold fell, snapping a six-day rally, as the Greece news trimmed its safe-haven appeal.

The Greek political parties who won will begin forging a government on Monday, but analysts cautioned the optimism and the price gains may be short-lived.

"I'm not sure the rally is going to last long. The problems are still there, you still have huge fiscal issues and it's not just Greece, it's Spain and others," said Dominic Schnider, executive director for wealth management research at UBS.

Most commodity prices have already come off the session's highs and gold has cut its losses, reflecting investor caution on what awaits the euro zone after the Greek poll, given high borrowing costs in Spain and Italy and the continued threat to the global economy from the region's debt crisis.

Brent crude was up 92 cents at $98.53 a barrel by 0312 GMT, well off a one-week high of $99.50 touched earlier. U.S. oil gained 84 cents to $84.87, after hitting a one-week top of $85.60.

"We should see the concerns over Italy and Spain restricting any further upside moves on crude," said Jim Ritterbusch, president of trading consultancy Ritterbusch & Associates in Galena, Illinois.

Oil players are also watching the start of talks in Moscow between world powers and major oil producer Iran.

The United States, Russia, China, France, Britain and Germany are hoping to win concessions from Tehran and forestall a potential new war in the Middle East that could disrupt oil supplies.

GOLD LOSES SHINE

Spot gold dropped 0.3 percent to $1,623.40 an ounce, after falling more than 1 percent earlier as the Greek outcome revived appetite for riskier assets.

Bullion, which often tracks movements in the euro ignored steep gains in the single currency, but analysts are convinced gold's losses should be curbed given a shaky global economy.

"The Greek situation looks okay for now, but I think there's not much reason to sell," said Yuichi Ikemizu, head of commodity trading for Japan at Standard Bank.

This week's U.S. Federal Reserve meeting, where investors will be looking for more clues on the chances of a third round of quantitative easing after a recent spate of weak U.S. economic data, will be key for the gold market.

Gold is up more than 4 percent so far this month, mainly after rising by around that much on June 1 - its biggest rally in over three years - when dismal U.S. jobs data fueled talk of more U.S. monetary easing.

Copper rose half a percent to $7,550 a tonne, coming off the session's peak of $7,615, its loftiest since May 30.

But copper's gains were trimmed by data showing average home prices in China's 70 major cities fell for a third straight month on a year-on-year basis since Beijing imposed strict curbs on property speculation more than two years ago.

U.S. wheat and corn also came off the day's peaks, with Chicago July wheat up 0.7 percent at $6.14 a bushel after rising as high as $6.19-1/2. December corn gained 1.1 percent to $5.11-3/4, off a session high of $5.16-1/2.

Tokyo rubber was up 3 percent at 255 yen per kg, after hitting a high of 257.4 yen, a level not seen since June 1. (Additional reporting by Luke Pachymuthu and Lewa Pardomuan; Editing by Himani Sarkar)

Basic Materials Energy