* Dollar strengthens to one-month high versus the euro
* European shares rise on ArcelorMittal, banks, techs
* SPDR gold ETF sees biggest outflow since late October
(Updates throughout, changes dateline - pvs TOKYO)
By Jan Harvey
LONDON, April 17 (Reuters) - Gold fell on Friday, extending
the previous session's near 2 percent losses, as the dollar rose
to a one-month high against the euro and stock markets firmed,
denting the metal's appeal as an alternative investment.
A dip in holdings of the world's largest gold-backed
exchange-traded fund also hurt sentiment, analysts said.
Spot gold <XAU=> was bid at $870.70 an ounce at 0958 GMT
from $874.55 late in New York on Thursday.
Gold's decline "is linked to equities, and also the
re-emergence of positive risk appetite by investors," according
to Societe Generale analyst David Wilson.
Given this, the fall in holdings of the SPDR Gold Trust ETF
<GLD> by the most since October 23 is unsurprising, he said.
"A lot of the flow into the gold funds has been taking the
view of gold as a safe haven," he said.
"But as other asset classes begin to become attractive, it
makes pefect sense that you are seeing money being withdrawn
from the gold funds to be put into other assets."
The trust's holdings fell 8.25 tonnes on Thursday from their
previous record level to 1,119.43 tonnes. []
Equities continued to strengthen on Friday, further hurting
gold. European shares rose in early trade, while world stocks
headed for a sixth consecutive week of gains. []
On the currency markets, the dollar strengthened to a
one-month high versus the euro, with fears over euro zone
economies flaring after Moody's said Ireland's AAA rating may be
cut. []
A firmer dollar typically weighs on gold, which is often
bought as an alternative investment to the currency.
On the demand side, gold buying in India, the world's
largest bullion buyer, has ticked up in recent days as prices
fell, and ahead of the Hindu festival Akshaya Tritya on Apr. 27.
A dealer at a private bank in Mumbai said all banks were now
importing gold for customers. Demand for the metal in India fell
sharply last year as prices rose.
REVIVE
India's gold imports in the first 15 days of April were 10
tonnes as falling prices revived demand after very few imports
in the previous two months, the head of Bombay Bullion
Association (BBA) said on Thursday.
Among other precious metals, spot platinum <XPT=> was bid at
$1,208 an ounce against $1,201.50, while spot palladium <XPD=>
was bid at $233 an ounce against $231.
Swiss bank UBS raised its 2009 price view for platinum to
$1,100 an ounce from $1,050 previously, and its 2010 forecast
for the precious metal to $1,175 an ounce from $1,100.
"Although we are decidedly unimpressed with current
industrial demand for platinum..., much greater-than-expected
Chinese platinum buying has caused us to lift our forecasts
somewhat," said the bank in a note.
Hopes that the economic downturn may have reached its nadir
have benefited prices of the industrial precious metals, with
both platinum and palladium posting gains in the first quarter.
Elsewhere Rhodium <RHOD-LON> climbed 22 percent this week as
hopes the downturn in the automotive sector is bottoming out
lifted interest in all the platinum group metals, which are a
key component in autocatalyst manufacture. []
Ruthenium <RUTH-LON> also ticked higher, rising 7 percent to
$75 an ounce from $70.
Silver <XAG=> was bid at $12.05 an ounce against $12.21.
(Reporting by Jan Harvey; Editing by Keiron Henderson)
