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PRECIOUS-Gold pares losses after Ukraine reports clash with Russians

(New throughout, updates prices and market activity, adds second byline and dateline)

NEW YORK/LONDON, Aug 15 (Reuters) - Gold prices were slightly lower on Friday, paring losses on safe-haven buying as equity markets slid after Ukraine said its forces had engaged a Russian armored column on Ukrainian soil.

Investors bought bullion and U.S. Treasuries after Ukraine said its forces had attacked and partly destroyed a Russian armored column that crossed into Ukrainian territory. Moscow said its forces had not crossed into Ukraine, and accused Kiev of trying to sabotage deliveries of aid.

"The news definitely helps gold reverse higher and shows that gold is very susceptible to geopolitical tensions," said Phillip Streible, senior commodities broker at RJ O'Brien. "When these developments cool, you will see the gold market come right back down."

Spot gold was down 0.7 percent at $1,303.03 an ounce by 11:16 a.m. EDT. It traded as low as $1,292.40 just before the Ukraine headlines.

U.S. COMEX gold futures for December delivery were down $10 at $1,305.70 an ounce, with trading volume on track to finish sharply higher than its 30-day average, preliminary Reuters data showed.

Earlier in the session, bullion was down more than 1 percent because of weak physical demand, gains in U.S. equities and weak U.S. producer inflation data. But stocks fell after the news from Ukraine, while benchmark 10-year U.S. Treasury bond prices rose.

Among other precious metals, silver was down 0.7 percent at $19.55 an ounce. Platinum was down 0.4 percent at $1,451.74 an ounce, while palladium climbed 0.9 percent to $888.50 an ounce.

The silver market entered a new era in benchmarking on Friday after a regulatory drive for more transparency in price setting brought the 117-year-old silver 'fix' to an end.

(Additional reporting by A. Ananthalakshmi; Editing by David Evans/William Hardy/Susan Fenton)