PRECIOUS-Gold surges 2 pct as share sell-off sparks flight to safety

* Wall Street extends slide, world equities at 1-year low

* Palladium hits highest since Jan. 26

* Gold sees best one-day pct gain since June 2016

* Holdings in SPDR Gold Trust rise for first time since July (Adds quotes, updates prices)

BENGALURU, Oct 11 (Reuters) - Gold rose over 2 percent to more than two-month highs on Thursday as sliding global stock markets sent risk-wary investors rushing to the safe-haven asset.

Spot gold was up 2.1 percent at $1,218.92 as of 11:56 a.m. EDT (1556 GMT), after hitting its highest since Aug. 2 at $1,220.75. It was also the metal's best one-day percentage gain since June 2016.

U.S. gold futures added 2.6 percent to $1,223.26 an ounce, after hitting its highest since Aug. 10 at $1,224.40.

Bullion also broke above a narrow trading range it has been stuck in for the past 1-1/2 months, triggering fresh buying interest and forcing investors to cover their short positions, analysts said.

Wall Street extended its slide to sixth session on Thursday after European stocks slumped to a 21-month low, pointing to growing risk aversion across global markets.

"A lot of people are running to gold as a safe-haven trade, diversifying into the asset and selling the dollar," said Michael Matousek, head trader at U.S. Global Investors.

"Now that gold has broken through the strong resistance level at $1,210, a lot of new long positions are coming in."

Meanwhile, U.S. President Donald Trump launched a second day of criticism against the Federal Reserve on Thursday, calling its interest rate increases a "ridiculous" policy that was making it more expensive for his administration to finance its escalating deficits.

The Fed increased rates last month for the third time this year and is widely expected to hike again in December.

"As a stock market sell off continues, gold is once again a desired destination in times of uncertainty. The metal had lost some cache in minds of investors, but when there is no clear safe haven, funds are flowing to gold," said Alfonso Esparza, Senior Market Analyst at OANDA.

Gold has fallen more than 10 percent since hitting a peak in April, with investors increasingly switching to the safety of the greenback as the U.S.-China trade war unfolded against a backdrop of rising U.S. interest rates.

But prices have recovered from a 1-1/2-year low of $1,059.96 hit mid-August, propped up by limited safe-haven buying at lower levels linked to concerns over economic growth and inflationary pressure from soaring oil prices.

Holdings in the SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, rose 1.2 percent to 738.99 tonnes on Wednesday, the first gain since July and the biggest inflow since March.

Palladium rose 2.3 percent to $1,095, after hitting its highest since Jan. 26 at $1,096.80. Silver rose nearly 2 percent to $14.53, while platinum rose 2 percent to 834.60, after touching its highest since Aug. 3 at $841. (Reporting by Nallur Sethuraman and Arpan Varghese in Bengaluru; Editing by Marguerita Choy and Adrian Croft)