PRECIOUS-Gold steadies as lower dollar offsets China worries

* SPDR posts 8.39 T outflow, biggest since December

* Investors await developments in Ukraine

* Shanghai gold still at a discount to London spot prices

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LONDON, April 17 (Reuters) - Gold steadied around $1,300 an ounce on Thursday as a lower dollar and accommodative U.S. Federal Reserve monetary policy counterbalanced worries over the strength of Chinese demand and sales from gold-backed funds.

Holdings in the world's biggest exchange-traded fund, SPDR Gold Trust, fell 8.39 tonnes to 798.43 tonnes on Wednesday, the biggest outflow since late December.

Spot gold was unchanged at $1,302.20 an ounce by 1212 GMT, while gold futures for June delivery were down 0.1 percent to $1,302.70 an ounce.

The metal had fallen nearly 2 percent on Tuesday and has remained broadly range-bound since then around $1,300 on fears over slowing demand in top consumer China.

"What is rattling gold is talks of how much is being financed with gold in China, which for me is quite bearish because it means that the China's physical demand story is not as strong as it was thought," Societe Generale analyst Robin Bhar said.

A report from the World Gold Council earlier this week said that Chinese firms could have locked up as much as 1,000 tonnes of gold in financing deals, indicating that a big slice of imports has been used to raise funds due to tight credit conditions, rather than to meet consumer demand.

The dollar was down 0.2 percent against a basket of currencies after Fed Chair Janet Yellen reiterated an accommodative monetary policy stance.

Her dovish remarks offset data suggesting that the U.S. economy was regaining momentum. U.S. industrial production rose at a faster-than-expected clip in March, while the Fed's Beige Book report showed economic activity picked up in recent weeks.

A pick-up in economic growth would encourage investors to gain exposure in riskier assets, rather than buying gold as a form of insurance against risk, analysts said.


Any escalation in tensions between Russia and the West over Ukraine could offer some upside for bullion.

Separatists flew the Russian flag on armoured vehicles taken from the Ukrainian army, humiliating a Kiev government operation to recapture eastern towns controlled by pro-Moscow partisans.

Foreign ministers from East and West will try to defuse the Ukraine crisis on Thursday in Geneva.

"Safe-haven demand for gold will likely become a feature again in the near term (on Ukraine). But the market remains fickle, and profits are likely to be taken off the table quickly," ANZ analysts said in a note.

Physical buyers are also reluctant to purchase jewellery, bars and coins at current price levels as they see further downside to the metal, traders said.

China has been leading the drop-off in physical demand in Asia. Shanghai prices have been at a discount to spot prices for more than a month on soft demand and a weaker yuan, denting the incentive for banks to import.

Gold prices are likely to keep falling through 2015 after a second annual decline this year as U.S. monetary policy normalises and investors switch to higher-yielding assets, the GFMS team at Thomson Reuters said in a report on Thursday.

Among other precious metals, silver rose 0.2 percent to $19.64 an ounce.

Platinum gained 0.3 percent to $1,432.50 an ounce, and palladium lost 0.3 percent to $795.25 an ounce.

(Additional reporting by A. Ananthalakshmi in Singapore; editing by Jane Baird)