PRECIOUS-Gold slides 2 pct, mirrors higher Wall Street

                                
 * Wall Street rebounds at the open after losses in Europe
                                
 * SPDR gold ETF records first outflow since early January
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 By Jan Harvey
                                
 LONDON, March 9 (Reuters) - Gold fell nearly 2 percent in
Europe on Monday as United States equities opened higher,
reversing losses seen in Europe and Asia and diverting
investment from the precious metal.
                                
 Spot gold <XAU=> slipped to a low of $922.15 an ounce, and
was at $924.10/926.10 an ounce at 1423 GMT from $939.60 late in
New York on Friday.
                                
 "The New York stock exchange opened up and rallied, and gold
has come off," said Commerzbank trader Rory McVeigh. "We are
trading in this cycle now of gold as a hedge against the New
York stock exchange."
                                
 U.S. stocks rose, with the S&P 500 <.SPX> and Nasdaq <.IXIC>
both climbing more than 1 percent as shares of big-cap companies
rebounded after Friday's sell-off. [ID:nN09385642]
                                
 European stocks had fallen in earlier trade, with the STOXX
600 index <.STOXX> hitting its lowest level since September
1996, as banks slipped after the UK government lifted its stake
in Lloyds Banking Group <LLOY.L>. [ID:nL9205396]
                                
 Equity weakness broadly supported gold towards the end of
last week, although the precious metal was caught up in a stocks
sell-off last Monday as investors sought liquidity.
                                
 Traders shrugged off an outflow of metal from
exchange-traded funds last week, which saw the world's largest
gold-backed ETF record its first decline since January 8.
                                
 The SPDR Gold Trust, the world's largest gold-backed ETF,
recorded its first outflow since January 8 on Friday. Its
holdings dipped 0.3 tonnes or 9,454 ounces that session.
[ID:nT252679]
                                
 UBS analyst John Reade said the total gold holdings of the
nine major ETFs the bank follows fell to 48.30 million ounces on
March 6 from a revised total of 48.40 million ounces previously.
                                
 Demand for the precious metal from ETFs, which issue
securities backed by physical stocks of gold, was a major price
driver earlier in the year. However, traders said they expected
these inflows to resume.
                                
 "I think that there will be enough worrying news in the
first half of 2009 for ETF demand to remain solid," said David
Thurtell, an analyst at Citigroup.
                                
 
                                
 DEFICIT
                                
 Among the other external drivers of gold, the dollar gave up
gains against the euro after the equity markets opened. It had
firmed in early trade against the euro as weak equity markets
weighed on the single currency. [ID:nN09537334]
                                
 Volatility in the foreign exchange markets has made gold
increasingly attractive to investors as an alternative to paper
currencies.
                                
 "While the financial environment remains poor and a number
of currencies struggle under the weight of bloated balance
sheets, gold is expected to remain an important element in
portfolio management at the personal, professional and central
bank level," said Standard Bank in a monthly note.
                                
 Oil prices jumped nearly 6 percent to top $48 a barrel, as
investors expected OPEC will cut output at its production
meeting this month. [ID:nSP209420]
                                
 Demand for gold from jewellery buyers in traditionally
strong markets such as India and China remained weak, however.
Scrap sales are also putting pressure on premiums for gold bars,
dealers said. [ID:nSP493799]
                                
 "The physical side is still in selling mode," said one Hong
Kong-based dealer.
                                
 Spot silver <XAG=> slipped to $13.16/13.23 an ounce from
$13.32.
                                
 Spot platinum <XPT=> fell to $1,048.50/1,058.50 an ounce
from $1,066, while spot palladium <XPD=> slipped to
$195.50/200.50 an ounce from $201.
                                
 (Reporting by Jan Harvey; Editing by William Hardy)