* Dollar turns lower versus the euro
* Stock markets wilt in Europe on BoA news
(Updates throughout, changes dateline - pvs SINGAPORE)
By Jan Harvey
LONDON, May 6 (Reuters) - Gold edged up on Wednesday,
recovering earlier losses, as the dollar gave up gains versus
the euro and stock markets opened lower, with investors spooked
by news Bank of America may need $34 billion in extra capital.
Its rise was capped, however, by technical factors and hopes
the global economic slowdown is bottoming out.
Spot gold <XAU=> was bid at $904.20 an ounce at 0855 GMT,
against $903.20 an ounce late in New York on Tuesday.
Societe Generale analyst David Wilson said while the dollar
and stocks were supportive, gold's gains were being limited by
optimism the worst of the global economic downturn may be over.
He said equity markets' ability to shake off weaker than
expected U.S. GDP data last week and more positive economic news
from China was boosting appetite for assets typically seen as
riskier, such as stocks.
"The increasing amount of non-negative economic news is
driving investors to look more favourably at equities, and even
base metals, and obviously that is going to be to the detriment
of gold," he said.
"As more positive economic signals appear, there will be
less incentive to hold gold as a safe haven play."
Stock markets slipped and the yen -- which, like gold, is
often bought as a safe haven -- rose on Wednesday after news
that Bank of America will need billions of dollars in extra
capital, which blunted appetite for risk. []
The dollar also gave up gains versus the euro, having risen
against the single currency in Asian trade. Gold is often bought
as an alternative to the U.S. currency and tends to move in the
opposite direction to it. []
Investors are awaiting the outcome of further U.S. bank
stress tests later this week, as well as key U.S. economic data
and an interest rates announcement from the European Central
Bank on Thursday.
NEAR HIGH
Silver prices tracked gold to rise slightly, but remained
below the last session's near six-week high. Data showed ETF
Securities' Physical Silver exchange-traded fund <PHAG.L> added
nearly 200,000 ounces to its reserves on Tuesday.
However, holdings of the world's largest silver-backed ETF,
the iShares Silver Trust <SLV> dipped for the first time in more
than a month, by just over 3.5 tonnes.
"The gains yesterday led the gold/silver ratio to its lowest
in over seven months, with the industrial metal looking more
positive from a technical view, having broken through its
February trendline," said TheBullionDesk.com analyst James
Moore.
"The target now is for silver to hold ground above $12.80
and to challenge overhead resistance from March highs around
$13.90 and February highs around $14.64," he added.
Silver <XAG=> was bid at $13.42 an ounce against $13.34.
Among other precious metals, spot platinum <XPT=> was bid at
$1,126 an ounce against $1,125.50, while spot palladium <XPD=>
was bid at $221 an ounce against $218.50.
(Reporting by Jan Harvey; Editing by Keiron Henderson)
