LONDON, Oct 6 (Reuters) - Gold recovered on Monday from losses made in Asia overnight, as worries over the outlook for the financial sector after a sharp slide in equity markets boosted interest in gold as a haven from risk.
But gains were limited as the dollar held near a 13-month high against the euro, denting the precious metal's appeal as a currency hedge, and oil prices slipped more than $4 a barrel.
Spot gold was quoted at $839.20/841.20 an ounce at 1000 GMT, up from $834.80 in late New York trade on Friday. Earlier it slipped nearly 1 percent as the dollar firmed.
"The initial sell-off was mainly because of the dollar," said Afshin Nabavi, head of trading at MKS Finance, adding that both the dollar and the financial markets will drive the gold market today.
European shares fell sharply in early trade after heavy losses on Wall Street on Friday. By mid-morning, the UK FTSE 100 .FTSE was down 5.8 percent, Germany's DAX .GDAXI off 5.7 percent and France's CAC 40 .FCHI down 6 percent. [ID:nL6317369]
Losses on the equity markets typically spur buying of alternative assets, such as bullion.
But gold's gains were limited by dollar strength. The U.S. currency extended gains against the euro, hitting a 13-month high, as investors worried about the outlook for European banks after leaders decided against a common bank bailout plan over the weekend. [ID:nTKW003044]
The other main external driver of gold, oil, also weighed on bullion prices. U.S. crude futures slipped more than $4 to below $90 a barrel as traders worried efforts to avert further financial turmoil would not stem falling demand. [ID:nSP376373]
Gold usually moves in tandem with crude, as it is often bought as a hedge against oil-led inflation.
"(People want to) own gold as a safe haven investment, but the oil price is as low as last February," said Michael Blumenroth, a trader at Deutsche Bank.
Prices are being supported by strong investment demand for gold coins and bars, traders say, as well as interest in bullion-backed exchange traded funds. The two main gold and silver ETFs remain near record levels, despite recent outflows.
Holdings of the SPDR Gold Trust GLD, the world's largest gold-backed ETF, eased 2 percent from last week's record highs on Friday, according to the fund. [ID:nL6600786]
The amount of metal held to back the largest silver ETF has also slipped from record levels. The iShares Silver Trust SLV.A said its holdings eased 3/4 of a percent or just over 50 tonnes week-on-week to 6,849.50 tonnes on Friday.
Silver ETFs have proved popular in recent months as lower silver prices attract more retail investors to the market.
Spot silver was quoted at $11.09/11.17, unchanged from $11.09 in late New York trade on Friday.
Among other precious metals, spot platinum eased to $946/966 an ounce from $950. Earlier it slid more than 3 percent, pressured by fears slowing economic growth would dent demand from carmakers, major consumers of the white metal.
"Prices continue to fall fast as auto sales fall," said Fairfax analysts John Meyer. "(A) negative outlook from the Paris auto show has not helped sales."
"ETF sales are visible and may create the appearance of a supply surplus this year," he added.
Palladium slipped to $192/202 an ounce from $194.
(Reporting by Jan Harvey; editing by Christopher Johnson)