By Jan Harvey LONDON (Reuters) - Gold softened in Europe on Tuesday, falling below $1,060 an ounce, as the dollar rebounded from its weakest level in 14 months versus the euro, clipping interest in the metal as an alternative asset. Platinum and palladium also pared gains after reaching their highest in more than a year, buoyed by earlier strength in gold prices and supply concerns. Spot gold was bid at $1,058.65 an ounce at 11:20 a.m. EDT (1520 GMT) against $1,062.70 late in New York on Monday. Earlier the precious metal touched a session high of $1,067.70 an ounce, close to the record high of $1,070.40 it hit last week. U.S. gold futures for December delivery on the COMEX division of the New York Mercantile Exchange rose $1.90 to $1,059.90 an ounce. Gold is closely tracking the euro-dollar exchange rate, a trend analysts say is likely to ultimately lead it back upwards. "The gold market really comes down to where you think the dollar is going," said Citigroup analyst David Thurtell. "We are still pretty bearish on the dollar, so that makes us favourable to gold." "People are worried about debt issuance by governments, inflation problems. It only takes a small allocation of fund portfolios to gold to really lift the market. The gold market is tiny compared to the bond and equity markets." The euro relinquished early gains to trade lower against the dollar after options-related barriers kept it from breaking above $1.50. The U.S. unit earlier slid to 14-month lows against the euro, as rising risk appetite pressured the dollar. World stocks .MIWD00000PUS hit a new 12-month high on Tuesday, fueled by optimism over corporate earnings and the global recovery after strong results from U.S. heavyweights Apple (AAPL.O) and Texas Instruments (TXN.N). Standard Bank analyst Walter de Wet said given the dearth of physical demand for bullion, gold was primarily driven by the dollar, which in turn was in thrall to sentiment on the equity markets as earnings season advances. "We are waiting for a whole bunch of earnings reports to come into the market, and if the past week's reports are anything to go by, these ones will also be positive," he said "If you see equities rising and U.S. Treasuries being sold, dollars will also be sold, which will make the dollar weaker." TECHNICAL SUPPORT Gold is technically well placed to build on the 6 percent gains it has posted in the last month, analysts who study charts of past price movements said.

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