UPDATE 6-Gold ends lower as global market fears lessen

* Gold drops as on signs of financial markets recovery

* Weaker crude oil prices also weigh on bullion

* Platinum extends slide as supply fears recede (Recasts, updates with quotes, closing prices, market activity, adds NEW YORK to dateline)

By Frank Tang and Jan Harvey

NEW YORK/LONDON, July 18 (Reuters) - Gold retraced from its session lows but still ended 1 percent lower on Friday, as signs of stability in financial markets reduced bullion's safe-haven appeal in times of market turmoil.

Spot gold <XAU=> was at $955.45/957.05 by New York's last quote at 2:15 p.m. from $962.10/963.10 an ounce late in New York on Thursday, having earlier slipped as low as $949.50 an ounce.

The precious metal slipped to a one-week low in early afternoon trade after better-than-expected earnings from leading U.S. bank Citigroup boosted the dollar and sent equity markets higher in Europe.

In addition, signs of resiliency in the financial markets also dent gold's status as a safe haven.

"The key reason why we have lower metals in the last couple of days is because of less flight-to-safety buying and a better atmosphere surrounding the financial system," said Bill O'Neill, managing partner of LOGIC Advisors in New Jersey.

U.S. gold contract for August delivery GCQ8 settled down $12.70, or 1.3 percent, at $958 an ounce on the COMEX division of New York Mercantile Exchange.

In early trading, U.S. stocks dipped as the market reacted to disappointing earnings from Microsoft (MSFT.O: Quote, Profile, Research, Stock Buzz) and Google (GOOG.O: Quote, Profile, Research, Stock Buzz) released after the bell on Thursday. This boosted interest gold as an alternative investment to equities.

"In the last few weeks, where the equity markets started to tumble, gold has started to shoot up, so there has been a good link," said Standard Chartered analyst Dan Smith.

The dollar also came off highs against the euro, having rallied against a basket of currencies earlier in the session after the Citigroup news. [ID:nN18308493]

Gold tends to benefit from a weaker dollar, as it is often bought as a hedge against currency weakness.

The other main external driver of gold, oil, was lacklustre. New York crude futures have dropped around 12 percent from the record high of $147.27 they hit at the end of last week, despite a small bounce on Friday [ID:nSP180848] before it eventually closed lower.

Weaker oil prices tend to drag gold lower, both because the precious metal is often bought as an inflation hedge and because softer crude can weaken interest in commodities as a whole.  Continued...