* Dollar retreats from 2-week highs against the euro * Oil drops $1 a barrel; traders await U.S. stocks data * Platinum climbs 3 pct after losses but quickly sheds gains (Recasts, adds comment, changes dateline, pvs SINGAPORE) By Jan Harvey LONDON, Nov 12 (Reuters) - Gold dipped a touch in Europe on Wednesday as easing oil and industrial metals prices weighed on prices, but the softer dollar limited losses. Traders are awaiting data on U.S. crude inventories later in the session for fresh direction. Spot gold was at $730.30/732.30 at 1028 GMT against $731.70 an ounce late in New York on Tuesday. The metal fell 2 percent in that session as the dollar firmed against the euro. A stronger dollar tends to dent interest in gold, which is often bought as an alternative investment to the U.S. currency. "A lot of people are standing on the sidelines and are not wanting to get involved until they have some kind of confirmation of direction," said Afshin Nabavi, head of trading at MKS Finance. "All the hints we are getting from the physical market are positive," he said. "Demand is still very, very strong." Crude oil futures shed more than $1 a barrel in early trade as fears the economic slowdown will knock demand offset news of supply reductions. [ID:nSP373294] Traders are awaiting fresh direction from U.S. oil stockpiles data, due out at 1535 GMT. "We will have a better idea about oil after the inventories come out," Nabavi said. Base metals prices were also generally soft on demand fears. Softer commodity prices usually pressure gold, as they dent interest in the asset class as a whole and reduce fears over inflation, against which bullion is often bought as a hedge. Equities recovered some ground in Europe on Wednesday after a slide in the previous session, despite losses on Wall Street and overnight in Asia. [ID:nLC3339] "Equity index futures are pricing gains in the U.S. and Asian markets today," Standard Bank analyst Manquoba Madinane said. "This, amid increasing oil price weakness, could draw more funds from commodity markets." DOLLAR SUPPORTS The dollar provided some support to gold in early trade, however, as it retreated from two-week highs against the euro. The U.S. currency managed to pare some losses as risk aversion took to the fore. [ID:nLC504142] Physical demand for gold jewellery, coins and bars was also underpinning prices at lower levels, with dealers reporting strong buying in major bullion market India as the wedding season gets underway. In Europe, refiners are struggling to keep up with demand for certain products, according to traders. "Gold and silver should continue to be supported by strong physical offtake, although the strength of the U.S. dollar is hampering attempts by the metals to trade up towards our one and three month forecasts," said UBS strategist John Reade. Chinese investment demand is gathering pace this year, with investment reaching 38.4 tonnes in the first nine months of 2008 against 24 tonnes for the whole of 2007, the China National Gold Corp said at a conference. [ID:nPEK182184] Among other precious metals, platinum rose 3 percent to a high of $840 an ounce, recovering some of Tuesday's $34 an ounce dip, but quickly shed gains in later trade as oil and other commodities softened. Spot platinum was later quoted at $821.50/841.40 an ounce against $812.50 an ounce late in New York on Tuesday. Spot palladium was at $213/221 an ounce against $212. Spot silver was at $9.73/9.81 an ounce against $9.74. (Reporting by Jan Harvey; editing by Karen Foster)

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