UPDATE 6-Gold ends higher as stocks pare gains, oil drops

* Gold ends higher as stocks weakens despite oil losses

* Dollar gains after stronger-than-expected U.S. data

* Platinum bounces off six-month low (Recasts, updates with quotes, closing prices, market activity, adds NEW YORK to dateline)

By Frank Tang and Raissa Kasolowsky

NEW YORK/LONDON, July 25 (Reuters) - Gold ended higher on Friday as weakness from U.S. equities boosted bullion's alternative investment appeal, despite pressure from lower oil prices and a stronger dollar.

Spot gold XAU= was at $927.40/929.40 an ounce by New York's last quote at 2:15 p.m. (1815 GMT), down from $923.00/924.00 late in New York on Thursday.

In afternoon trade, U.S. stocks pared initial gains as worries about financial stocks lingered, and that prompted investors to switch funds to gold and other alternative investment markets.

Andrew Montano, a director of precious metals at bullion dealer ScotiaMocatta in Toronto said that initial selling was seen after the dollar rose on stronger-than-anticipated U.S. durable goods and new home sales data.

Montano also said that physical gold demand improved somewhat as bullion prices dropped this week.

"We certainly have seen some physical off-take as prices come down, more so than we have seen in recent weeks, but we are in the slow season," Montano said.

Gold has dropped as much as $40 this week due to tumbling oil prices and a higher dollar. Just last week, bullion had moved within striking distance to the $1,000 mark.

U.S. gold futures for August delivery GCQ8 settled up $4.50 at $926.80 an ounce on the COMEX division of New York Mercantile Exchange.

"Gold is still taking its lead from the external drivers of currency movements and oil price movements," said Suki Cooper, analyst at Barclays Capital.

The dollar rose against the yen on Friday after a government report showing an unexpected rise in durable goods orders and a stronger-than-expected U.S. consumer sentiment reading for July eased worries over the U.S. economy. [ID:nN25483140]

A stronger greenback usually pressures gold, which is often bought as an alternative investment to the U.S. currency.

Oil CLc1 fell $2 to seven-week low just above $123 a barrel on Friday, extending a decline that has knocked more than $20 off prices in two weeks. [ID:nN25408667]