* European stocks rebound after heavy sell-off
* Dollar index recovers after deepest drop since 2011
* Palladium down more than 7 pct to lowest since 2010
* GRAPHIC-2015 asset returns-http://link.reuters.com/dub25t
(Updates throughout, changes dateline, pvs MANILA)
By Jan Harvey
LONDON, Aug 25 (Reuters) - Gold fell on Tuesday as global
markets found some respite after the previous day's rout, with
European stocks rising more than 3 percent and the dollar
rebounding from a seven-month low versus the euro and the yen.
Autocatalyst metal palladium continued to slide, however,
falling as much as 7 percent to its lowest in five years.
Spot gold XAU= was down 0.4 percent at $1,150.40 an ounce
at 0954 GMT.
U.S. gold futures GCv1 for December delivery were down
$3.70 an ounce at $1,149.90.
Gold had edged lower on Monday, with some traders citing
liquidation to cover losses on other markets, but largely held
its ground after a plunge in Chinese equities sent world stocks
and commodity prices tumbling and knocked the dollar.
While Chinese stocks fell another 8 percent on Tuesday,
markets elsewhere rebounded, with European shares climbing, oil
prices recovering from 6-1/2 year lows, and the dollar rising
0.4 percent. That has put pressure on gold. MKTS/GLOB
"If those trends continue, then certainly it will create
some short-term pressure on gold prices as the initial fear in
the marketplace that we saw yesterday dissipates," Standard
Chartered analyst Nicholas Snowden said. "But it's still an
extremely uncertain setting and in the short term gold will
benefit from that."
Gold has rebounded sharply from the 5-1/2 year low it hit in
July on the back of expectations that the Federal Reserve is on
track to raise interest rates this year for the first time in
nearly a decade, lifting the opportunity cost of holding gold
while boosting the dollar.
While those expectations have receded after a dovish reading
of the minutes of the Fed's last policy meeting and on fears of
a broader global economic slowdown, they are keeping a lid on
gold's gains.
"We're still in an environment where we know U.S. interest
rates will go up," Snowden added. "For gold, that limits how
much of a bid you will see, even with the sort of financial
market turmoil that ensued yesterday."
Palladium XPD= fell to a low of $528.50 an ounce, its
weakest since September 2010, and was later down 2.9 percent at
$554.50.
"Platinum group metals have noticeably been lagging in
recent weeks, failing to benefit more from gold's rebound," UBS
said in a note.
Platinum XPT= was down 0.1 percent at $987 an ounce, while
silver XAG= was up 0.1 percent at $14.79 an ounce.