* CME Group hikes margin calls for COMEX gold futures * Equities recover some of hefty losses, buy jitters remain * Euro, dollar both in doldrums; debt worries weigh By Jan Harvey LONDON, Aug 11 (Reuters) - Gold prices steadied after retreating from record highs in Europe on Thursday as a move by CME Group to hike margins for trading COMEX gold futures prompted some investors to cash in gains after an early rally. A recovery in stock markets also pointed to firmer appetite for assets seen as higher risk, potentially deflecting some investment from gold. Prices remain supported, however, by worries over the European banking sector and broader economic concerns. Spot gold was flat at $1,794.29 an ounce at 0846 GMT. The metal hit a record $1,813.79 an ounce in early Asian trading hours as concerns over the outlook for French banks with exposure to peripheral euro zone debt and market talk of a possible downgrade of France's AAA credit rating on Wednesday rattled investors. But its sharp rally ran out of steam after the CME Group said it was raising margins for trading Comex 100 Gold Futures by 22.2 percent. The strength of the metal's run-up this week, which saw it rising 9 percent to its peak, has left it vulnerable to correction, traders said. "The news came out when market was around $1,815 and the news took the market lower," said Afshin Nabavi, head of trading at MKS Finance. "There is still the uncertainty over a downgrade of France despite the rating agencies reaffirming (its) AAA rating, so it feels like gold could be in for another nervous day, with more possibility on the upside." The CME, the world's largest commodity exchange, lifted maintenance margins on gold futures to $5,500 per contract from $4,500 a contract for speculators, effective from the close of business on Thursday. A series of CME margin rises on silver in May after it hit a record near $50 an ounce sparked heavy selling that saw the metal lose a third of its value in just six sessions. While the margin hike for gold is weighing on prices, its impact is unlikely to be as dramatic, analysts said "More important as a driver of gold currently is the search for safety, driven by fears over global growth and the potential for sovereign debt downgrades in the U.S. and Europe, as well as the likelihood of the Fed funds rate remaining unchanged until 2013," said UBS in a note. "These are reasons entirely different, and significantly more substantive, than the search for a quick buck which caused the last leg of silver's rally at the start of Q2." ON TRACK TO CLIMB Despite Thursday's correction, gold remains on track for its biggest one-week gain since Sept. 2008, helped by hefty losses in stock markets. World stocks edged off this week's 11-month low on Thursday, helped by a recovery in U.S. stock futures, while European stocks surged. Gold's correlation with the S&P 500 was at its most negative since the fourth quarter of 2008 in early August. On the currency markets, the dollar index eased 0.3 percent. The euro edged off lows but was seen as vulnerable to worries about the euro zone sovereign debt crisis spreading to the region's banking sector. These fears are also underpinning gold. "Bullion is still looking dangerously overbought, but these are extraordinary circumstances, with risk aversion continuing to spiral out of proportion," said VTB Capital in a note. "Once again, euro-denominated gold outperformed other bullion crosses on heightened euro zone sovereign debt fears." Gold priced in euros hit a record 1,283.38 euros an ounce in earlier trade, while U.S. gold futures GCv1 for August delivery were up $13.30 an ounce at $1,797.60, having touched an all-time high at $1,817.60. Among other precious metals, spot silver was flat at $39.20 an ounce. Spot platinum was up 0.8 percent at $1,777.74 an ounce, while spot palladium was up 1.3 percent at $731.50 an ounce. The gold:platinum ratio held near its highest since the third quarter of 2008, with gold maintaining its historically unusual premium over the white metal. (Additional reporting by Amanda Cooper; Editing by Alison Birrane)

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