SINGAPORE, Oct 15 (Reuters) - Gold gained more than 1 percent on Wednesday after declines in stock markets and renewed fears the global economy could be tilting into recession prompted speculators to buy the metal seen as an alternative investment. Platinum dropped more than 2 percent as worries about demand resurfaced -- just one day after speculators and retail investors in Japan pushed up the price to its strongest in two weeks, above $1,000 an ounce. Gold traded at $842.75 an ounce, up $7.50 from New York's notional close. Gold jumped more than 2 percent to a high of $853.50 on Tuesday, but trimmed gains after the United States unveiled plans to take stakes in its biggest banks. "Long-term investors are active. This is a good chance to buy gold at this level. $900 is my price target within this week," said Yukuji Sonoda, a precious metals analyst at Daiichi Commodities in Tokyo. Gold traded around $900 in September and struck a two-month high of $931 last week before losing some of the gains to rallies in equities. Bullion was still below a record high of $1,030.80 hit in March. Japan's Nikkei slipped 1.4 percent on Wednesday, a day after its biggest one-day gain in history, with shares of exporters down as U.S. stocks fell on worries about the global economy.[.T] Volatile gold prices blunted buying appetite in India, the world's largest consumer, ahead of Diwali, the Hindu festival of lights, at the end of October. Investors, who normally take profits when prices soar, were also on the sidelines. "They are waiting because they think the market will rise even further because of the global crisis. They think gold prices may touch $1,000," said Girish Choksi, a dealer based in the western gold-trading city of Ahmedabad. The world's largest gold-backed exchange-traded fund, the SPDR Gold Trust, said its bullion holdings slipped on Oct. 14 by 3.06 tonnes to 767.58 tonnes, which suggested some investors booked profits from gold's recent gains. In other markets, oil fell towards $78 on recession fears, which could potentially cap gains in gold. The euro slipped 0.4 percent against the dollar to $1.3560. Platinum traded at $988.50 an ounce, down $29.00 an ounce from New York's notional close. It hit a two-week high of $1,040 on Tuesday, mainly due to buying from investors in Japan. A 5-percent decline in Tokyo platinum futures also ignited selling. More than 60 percent of global platinum use goes to autocalysts to clean exhaust fumes. "The problems in General Motor are not settled yet. That's why platinum is not so strong," said Daiichi's Sonoda, adding that trading houses were also seen selling back platinum. Labor unions in the United States and Canada expressed concern about the prospect of job losses from any merger between General Motors Corp and Chrysler LLC, adding that the automakers had not consulted union leaders. New York gold futures rose $7.2 an ounce to $846.7. Precious metals prices at 0224 GMT Metal Last Change Pct chg YTD pct chg Turnover Spot Gold 842.75 7.50 +0.90 1.21 Spot Silver 10.94 -0.01 -0.09 -25.93 Spot Platinum 988.50 -29.00 -2.85 -34.97 Spot Palladium 196.00 1.00 +0.51 -46.74 TOCOM Gold 2748.00 -13.00 -0.47 -10.20 16261 TOCOM Platinum 3224.00 -165.00 -4.87 -39.61 10267 TOCOM Silver 354.10 0.10 +0.03 -34.55 425 TOCOM Palladium 654.00 -20.00 -2.97 -51.59 90 Euro/Dollar 1.3547 Dollar/Yen 101.19 TOCOM prices in yen per gram, except TOCOM silver which is priced in yen per 10 grams. Spot prices in $ per ounce.

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