* Safe-haven bids boosts gold as stock markets tumble
* Dow tumbles nearly 300 points, while S&P 500 down 4 pct
* Investors hunt for bargains after recent retracement
(Recasts, updates with quotes, closing prices, adds NEW YORK
to dateline)
By Frank Tang and Jan Harvey
NEW YORK/LONDON, March 5 (Reuters) - Gold rose more than 2
percent on Thursday, fueled by flight-to-quality buying as
stock markets fell and investors saw a bargain in gold, which
had retreated from above $1,000 an ounce last month.
Wall Street stocks extended their slide to 12-year lows on
a warning of possible bankruptcy from General Motors and on
mounting concerns about the banking system.
"Looking at the equity markets, we are a little weaker,
which may help gold today," BNP Paribas analyst Michael Widmer
said. "We are seeing support emerging after the sharp price
falls of the past few weeks."
Spot gold <XAU=> was at $929.95 an ounce at 2:59 p.m. EST
(1959 GMT), up 2.5 percent from its last quote of $906.90 late
in New York on Wednesday.
U.S. gold futures for April delivery <GCJ9> settled up
$21.10, or 2.3 percent, at $927.80 an ounce on the COMEX
division of the New York Mercantile Exchange.
The Dow Jones industrial average <> tumbled nearly 300
points, while the S&P 500 index fell 4 percent. Shares of
Citigroup, once the world's largest bank by market value,
traded below $1 for the first time.
The yellow metal kept appreciating against a weaker
equities market. The gold-to-S&P ratio jumped to 1.36, its
highest level since 1990, Reuters data showed.
Gold was supported after the European Central Bank cut
interest rates by 50 basis points as expected. ECB president
Jean-Claude Trichet said inflation would remain below target
this year and next.
The Bank of England cut rates by 50 basis points to a
historic low of 0.5 percent, and said it would buy assets worth
75 billion pounds to help the UK economy. []
"Today's cut in interest rates by the Bank of England (and)
its decision to increase money supply in the banking system...
will remind investors of the specter of future inflation and
its eroding effect on wealth," said Marcus Grubb, head of
investment at the World Gold Council.
CONSOLIDATION PHASE SEEN
But supply-demand fears kept a cap on enthusiasm for gold.
Buying has stalled from gold-backed exchange-traded funds.
Holdings of the largest ETF, New York's SPDR Gold Trust <GLD>,
remained at the level hit last Thursday. Its holdings have
risen only 5 tonnes in the last fortnight, compared with 205
tonnes in the first six weeks of 2009. []
On the supply side, dealers in Asia and the Middle East
reported surging inflows of scrap as high prices lured sellers.
Turkey imported no gold last month as domestic supply met
needs, and Indian scrap selling is also picking up.
Gold has been in a consolidation phase as investors
consider the outlook for other markets. The fear that drove the
metal above $1,000 an ounce in February has been easing,
analysts say.
"Steady support for gold came from investors who viewed the
recent large decline as a buying opportunity," said George
Gero, vice president of RBC Capital Markets Global Futures.
Among other precious metals, spot silver <XAG=> was at
$13.23 an ounce, up 2.6 percent from its Wednesday finish of
$12.90, while spot palladium <XPD=> was at $195.50, down 0.3
percent from its late Wednesday New York quote of $196.
Platinum prices inched higher after firming more than 1
percent on Wednesday on hopes China would ramp up plans to
stimulate the economy. Spot platinum <XPT=> was at $1,060.00 an
ounce, up 1.3 percent from its previous close of $1,046.
(Reporting by Frank Tang and Jan Harvey; Editing by David
Gregorio)
