* Equities slide on fears flu pandemic could hit economy
* Dollar firms as risk aversion cranks up
* Indian traders buy gold but high prices prompt scrap sales
(Updates throughout, changes dateline - previous TOKYO)
By Jan Harvey
LONDON, April 27 (Reuters) - Gold steadied in Europe on
Monday after rising to a four-week high earlier in the session
as equities fell on concerns over the prospect of a global flu
pandemic, which boosted interest in bullion as a haven.
The precious metal is also underpinned by technical factors
after breaking above $900 an ounce late last week and it has
been boosted by news China has significantly increased its gold
reserves, analysts said.
However, gains in the dollar versus the euro are limiting
gold's climb.
Spot gold <XAU=> was bid at $911.40 an ounce at 0910 GMT,
against $911.10 an ounce late in New York on Friday. Earlier it
touched a high of $918.25.
Saxo Bank senior manager Ole Hansen said traders would be
watching how the wider markets such as equities react to the
prospect of a flu outbreak.
"If there is some worry that this will prolong the slump, or
will increase the difficulties of the economy returning to some
kind of shape...that might have an impact on gold," he said.
World stocks tumbled on Monday after seven weeks of gains,
while oil and the euro fell, as concerns intensified that the
spread of swine flu will hit the global economy. []
Fears that any tentative signs of recovery in the global
economy could be crushed by the virus, which has killed more
than 100 people in Mexico, have put markets on edge. []
On the foreign exchange markets, the euro dropped 0.5
percent versus the dollar, while the yen climbed to its highest
in a month against the U.S. currency. []
A stronger dollar typically weighs on gold, which is often
bought as an alternative asset to the currency.
Gold broke through the psychological $900 barrier late last
week, and was boosted on Friday by news that China has lifted
its gold reserves by three quarters to 1,054 tonnes, against 600
tonnes at the time of its last report in 2003.
POISED
The news prompted speculation the bank could be poised for
further purchases.
"The possibility that China might will increase its official
sector gold holdings further is potentially supportive of
prices," said HSBC in a research note.
There were also signs of recovery in demand for physical
gold. Dubai's gold imports in the first quarter of the year grew
15 percent to 140 tonnes from a year earlier, according to the
Dubai World Group. []
Meanwhile gold buying in the world's biggest gold consumer,
India, was strong ahead of the wedding season there. However, a
rise in prices has lifted selling of scrap jewellery back onto
the market, dealers said. []
Demand for gold-backed exchange traded funds also remained
stagnant. The largest gold ETF, New York's SPDR Gold Trust, said
its holdings were unchanged on Friday from the day before.
[]
Among other precious metals, spot platinum <XPT=> was bid at
$1,150 an ounce against $1,173.50, while spot palladium <XPD=>
was bid at $230.50 an ounce against $231.
James Moore, an analyst for TheBullionDesk.com, said while
platinum ETF holdings rose last week, "the PGMs could be in for
a bumpy rise this week with restructuring deadlines from GM and
Chrysler looming, as well as the release of U.S. auto sales for
April".
Silver <XAG=> was bid at $13.00 an ounce against $12.84. The
metal rose 3 percent to a near four-week high of $13.20 earlier
in the session, but remains vulnerable to a correction in gold,
analysts said.
(Reporting by Jan Harvey; Editing by Anthony Barker)
