UPDATE 4-Gold surges 3.5 pct on dollar, equity slip

                                
 * Gold hits 1-month high as dollar, stock markets weaken
                                
 * Dollar falls to 3-wk low on equity worries, Fed comments
                                
 * Platinum, silver track gold higher
                                
 
                                
 (Recasts, updates throughout)
                                
 By Jan Harvey
                                
 LONDON, June 26 (Reuters) - Gold surged 3.5 percent on
Thursday as the dollar weakened against the euro and as equity
markets slipped.
                                
 The U.S. currency had already traded lower for much of the
session as expectations for a U.S. rate hike receded after
comments from the Federal Reserve on Wednesday.
                                
 Gold <XAU=> rose to $909.60/910.60 an ounce at 1410 GMT from
$879.60/880.60 an ounce late in New York on Wednesday. Earlier
in the session it touched $910.60, its highest level since May
27.
                                
 The combination of a weak dollar and a slide in the equity
markets on concerns over the health of the automotive sector
"has been critical for gold", Merrill Lynch analyst Daniel Hynes
said. 
                                
 "This has set gold off again after it had been stuck in a
trend for a while now," he said. 
                                
 Platinum and silver tracked gold higher, rising 3 percent
and nearly 5 percent respectively.
                                
 The U.S. Federal Reserve dampened hopes for a rate hike,
saying inflation, while still a worry, was likely to temper
later in the year.
                                
 "The Fed wasn't as hawkish as the market expected, hence the
dollar is under pressure," said JP Morgan analyst Michael Jansen.
                                
 "People are starting to worry that the Fed might be slightly
behind the inflation story."
                                
 Fitch Ratings' decision to lower its credit ratings on
General Motors and Chrysler LLC on Wednesday has also hurt the
dollar, already reeling from the Fed's softer rhetoric on
inflation. [ID:nN26278787]
                                
 Oil, the other main external driver of the oil price, also
surged, trading up more than $4 a barrel at its session high on
the weaker dollar and bullish remarks from OPEC Secretary
General Chakib Khelil. [ID:nN26132848]
                                
 A slide in U.S. equity markets at the open on Thursday is
meanwhile dampening expectations for a recovery in the U.S.
economy, and boosting gold's safe haven appeal.
                                
 All three major U.S. indices fell 1 percent or more as the
market opened amid worries on the banking sector and among
technology companies. [ID:nN26291040]
                                
 In industry news, Gold Fields Limited <GFIJ.J> said it has
shut down a shaft of its Kloof Gold Mine in South Africa after
two employees were killed early on Thursday following an earth
tremor.
                                
 The company said it has lost 20 kilogrammes of gold from the
closure. [ID:nWEA0387]
                                
 Meanwhile spot platinum <XPT=> rose in line with gold,
climbing more than 3 percent to a session high of $2,078.00. It
later eased back to trade at $2,045.50/2,065.50 an ounce against
$2,004.50/2,024.50 late in New York on Wednesday.
                                
 Silver <XAG=> also tracked gold, rising nearly 5 percent to
a session high of $17.32. Later it was trading at $17.27/17.32
an ounce from $16.56/16.62 an ounce.
                                
 Among other precious metals, spot palladium <XPD=> was
little changed at $460.50/468.50 an ounce from $460.00/468.00 an
ounce.
                                
 (Reporting by Jan Harvey: Editing by Nigel Hunt)