* Simmering tensions over Ukraine hurt stocks, lift gold
* Friday's strong U.S. jobs data keeps a lid on gains
* Largest gold ETF reports first inflow since Feb. 25
(Updates prices, adds comment)
By Jan Harvey
LONDON, March 10 Gold recovered from early
losses to edge higher on Monday as support from the standoff in
Ukraine offset pressure from last week's strong U.S. payrolls
data and weakness in other commodities after a sharp drop in
Russian foreign Minister Sergei Lavrov told President
Vladimir Putin on Monday Russia's position on Ukraine was at
odds with the West, and that U.S. Secretary of State John Kerry
had declined an invitation to visit Russia for further talks.
Russian news agency Interfax earlier quoted a Ukrainian base
commander as saying Russian troops opened fire during the
takeover of a Ukrainian military post in Crimea.
Spot gold was up 0.2 percent at $1,342.60 an ounce at
1214 GMT, while U.S. gold futures for April delivery were
up $4.70 an ounce to $1,342.90.
"Stock market weakness and gold strength this afternoon seem
to stem back to the news from Crimea about shots being fired,"
Saxo Bank's head of commodity strategy Ole Hansen said. "It
highlights the nervousness about what can happen."
"Short-term traders in gold were playing it from the short
side earlier today, so it's back to square one for many."
The precious metal fell as low as $1,328.86 in earlier
trade, extending a 0.8 percent drop it made on Friday after U.S.
payrolls data beat forecasts, suggesting the Federal Reserve's
stimulus tapering efforts will stay on course.
On the wider markets, European shares erased early gains to
fall 0.7 percent after reports of renewed unrest in Ukraine.
Commodities in general sold off after a surprise fall in
China's exports, with copper sinking to 8-1/2-month lows, while
oil lost more than a dollar and Shanghai-traded commodities
China, the world's biggest consumer of many commodities
including gold, said on Saturday its exports unexpectedly
tumbled in February, swinging the trade balance into deficit.
Chinese gold prices were trading at a discount of $5-$6 an
ounce to spot prices on Monday, traders said, in a sign of weak
demand. Prices were at a premium of more than $20 at the
beginning of the year.
Two-way flows were evident in Asian gold trading overnight,
MKS said in a report. "Once the Shanghai Gold Exchange opened
some aggressive selling ensued, driving the price below $1,330,"
it said. "Once again retail bids below this level emerged and
supported the market."
Investor sentiment towards gold has been positive this year
after a 28 percent drop in prices in 2013.
Hedge funds and money managers raised their bullish bets in
gold futures and options for a fourth consecutive week as
geopolitical tensions boosted speculative interest to the
highest in more than a year, according to Friday data from the
Commodity Futures Trading Commission.
The world's largest gold-backed exchange-traded fund, the
SPDR Gold Trust, said its holdings rose 1.5 tonnes on
Friday, its first inflow since Feb. 25.
Among other precious metals, silver was flat at
$20.88 an ounce.
The gold/silver ratio, which measures the number of silver
ounces needed to buy an ounce of gold, hit a fresh five-week
high at 64.4 as silver underperformed on Monday.
Spot platinum was down 0.2 percent at $1,475 an
ounce, while spot palladium was down 0.9 percent at
$772.40 an ounce.
(Additional reporting by A. Ananthalakshmi in Singapore;
Editing by Anthony Barker and David Evans)