* Equities rise in Europe, Asia; world stocks hit 4-mth high
* Dollar recovers from 1-month low vs the euro
(Updates throughout, changes dateline from SINGAPORE)
By Jan Harvey
LONDON, May 5 (Reuters) - Gold edged lower in Europe on
Tuesday, reversing earlier small gains, as firmer equity markets
and a recovery in the dollar weighed on the precious metal.
However, caution ahead of the results of U.S. bank stress
tests later this week and worries over the inflation outlook are
continuing to support the metal, analysts said.
Spot gold <XAU=> was bid at $901.30 an ounce at 0916 GMT,
against $902.35 an ounce late in New York on Monday.
Prices rose more than 2 percent on Monday to break through
$900 an ounce, as weakness in the dollar boosted gold's appeal
as an alternative asset. However, it failed to sustain gains as
the dollar recovered, and remains vulnerable.
"As long as equity markets stay in good condition (and) the
dollar does not become too weak against other currencies...the
gold price will stay under pressure," Commerzbank analyst Eugen
Weinberg said.
European shares opened higher on Tuesday, led by gains in
the banking sector, while world stocks' climb to a four-month
high took the benchmark MSCI world equity index <.MIWD00000PUS>
into positive territory for the year. [] []
A rise in the stock markets suggests investors' appetite for
assets perceived as risky is sharpening, meaning interest in
gold as a safe haven could be waning, analysts said.
The dollar recovered from the one-month low it hit against
the euro earlier in the session to turn higher, as traders took
profits on the single currency. []
Gold, which is often bought as an alternative to the dollar,
typically moves in the opposite direction to the U.S. currency.
Investment in the precious metal through gold-backed
exchange-traded funds also remains relatively lacklustre.
Holdings of the largest gold ETF, SPDR Gold Shares <GLD>, were
unchanged on Monday for the seventh consecutive session.
HOLDINGS
In Europe, London's ETF Securities said holdings of its
three gold-backed ETFs firmed 0.5 percent week-on-week to 7.432
million ounces on Monday, while Zurich Cantonal Bank's gold ETF
holdings rose 4.5 percent on Monday from April 1. []
Analysts say the market is looking ahead to the result of
stress tests on U.S. banks due on Thursday. If banks need more
capital to deal with weakness in the financial system, risk
aversion is likely to return. []
Among other precious metals, platinum <XPT=> was bid at
$1,117 an ounce, unchanged from the level it reached late on
Monday, while palladium <XPD=> was bid at $219.50 an ounce
against $218.
Both metals have been battered by a spate of bad news from
the car industry, their main consumer. However, platinum in
particular has seen new demand from investors as they take
advantage of lower prices to buy into the metal.
Zurich Cantonal Bank's platinum-backed ETF saw inflows of
9,522 ounces between April 1 and Monday, lifting its total
holdings of the metal 5.9 percent to 170,322 ounces, it said.
"(Platinum) has touched $1,128 overnight but is likely to
remain volatile in the short-term as traders assess the impact
of slowing auto sales and fresh investment demand," said James
Moore, an analyst at The BullionDesk.com.
Silver <XAG=> was bid at $13.06 an ounce against $13.01.
(Editing by Sue Thomas)
