* Dollar slips from highs versus the euro
* Stock markets turn higher in Europe after good results
(Updates prices, releads)
By Jan Harvey
LONDON, May 6 (Reuters) - Gold rose on Wednesday, reversing
early losses as the dollar retreated from highs versus the euro,
but gains were held in check by a stronger performance from
stock markets and other so-called riskier assets.
Spot gold <XAU=> was bid at $905.50 an ounce at 1151 GMT,
against $903.20 an ounce late in New York on Tuesday.
Societe Generale analyst David Wilson said gold's gains were
being limited by perceptions that 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."
European shares rose for a sixth straight session on
Wednesday as a number of encouraging corporate results added to
views that the recession is easing. []
Data showed Europe's service sector shrank at its slowest
pace in six months in April, adding to signs the downturn may
have hit its bottom. Forecast-beating results from Europe's
largest bank, BNP Paribas, cheered traders. []
On currency markets the dollar pared 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 U.S. bank stress
tests later this week, after news that Bank of America may need
more capital. They are also eyeing key U.S. economic data and a
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," TheBullionDesk.com analyst James Moore
said.
"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=> rose to $13.53 an ounce against $13.34.
Among other precious metals, spot platinum <XPT=> was bid at
$1,128.00 an ounce against $1,125.50, while spot palladium
<XPD=> was bid at $222 an ounce against $218.50.
(Reporting by Jan Harvey; Editing by Anthony Barker)
