* Stocks take firmer tone, yen dips as risk appetite revives
* European, Asian markets thinned by May Day holidays
(Updates throughout, changes dateline - pvs TOKYO)
By Jan Harvey
LONDON, May 1 (Reuters) - Gold edged lower in Europe on
Friday as a recovery in risk appetite illustrated by the firmer
tone to stocks dented the metal's safe haven appeal, with
trading thinned by May Day holidays across Europe and Asia.
The market will be watching U.S. manufacturing and consumer
sentiment data due later for direction, analysts said.
Spot gold <XAU=> was bid at $881.00 an ounce at 0930 GMT,
against $885.50 an ounce late in New York on Thursday.
"As stock markets extend their gains, funds are likely to
get further diverted away from bullion into equities," said
Pradeep Unni, senior analyst at Richcomm Global Services.
"Technically, charts look quite weak and selling momentum
(should) gather pace as gold pierces through the $880 -$878
support," he said. Bargain hunting might limit the slide below
$864, he added.
The MSCI world index and European stocks were little changed
on Friday, but the equity markets' good performance in Asia,
where Japanese equities hit a four-month high, reflected hopes
the global economic downturn is bottoming out. []
Also illustrating renewed confidence in the economy, the yen
slipped to two-week lows versus the dollar and the euro. The
Japanese currency is typically a prime beneficiary of risk
aversion. []
Sharper appetite for risk, which has boosted stocks, has
knocked gold down more than $30 an ounce so far this week.
Silver has also suffered, shedding more than 5 percent from
early Monday trade.
Silver prices typically track gold, but as the market is
smaller and less liquid, it tends to be more volatile. Spot
silver <XAG=> was bid at $12.22 an ounce against $12.34.
DIRECTION
With trade expected to remain quiet early in the session
with much of Europe enjoying the May Day holiday, traders are
awaiting direction from economic data due out later in the
United States.
The Institute of Supply Management releases April
manufacturing data at 1400 GMT, March factory orders are due at
the same time, and the Reuters/University of Michigan consumer
sentiment reading will be released at 1355 GMT.
April vehicle sales data due for release later may also have
an impact on platinum and palladium, analysts said.
The metals have suffered from a fall in demand from the car
industry, which accounts for over half of global consumption of
the platinum group metals.
More bad news emerged on Thursday as Chrysler sought refuge
in Chapter 11 bankruptcy proceedings. []
"Platinum group metals remained on the defensive, as it was
unclear what impact on production the Chapter 11 filing may hold
for auto production," said HSBC analyst James Steel in a note.
"We believe that platinum prices have factored in weak auto
demand, and that any positive news about auto production may
trigger a PGM rally," he said.
Elsewhere ETF Securities, which operates Europe's largest
platinum-backed exchange-traded fund, said its Physical Platinum
fund <PHPT.L> saw an outflow of 16,600 ounces on Thursday,
equivalent to 5 percent of its total holdings. []
Spot platinum <XPT=> was bid at $1,094 an ounce against
$1,098, while spot palladium <XPD=> was bid at $211 an ounce
against $215.
(Reporting by Jan Harvey; Editing by Peter Blackburn)
