By Chikako Mogi

TOKYO, May 11 (Reuters) - Gold eased on Monday 11 May, weighed down by a recovery in investor confidence, but losses were limited by the dollar's sharp decline.

The dollar index extended losses on Monday 11 May as investors, emboldened by a smaller-than-expected fall in U.S. jobs, diversified into other currencies. The U.S. currency hit its lowest in seven weeks against the euro.

Gold and the dollar often move in opposite directions.

Asian stocks outside Japan rose in tandem with Friday 8 May's Wall Street gains after figures showed U.S. employers cut 539,000 jobs last month, the fewest since October, reinforcing expectations that the global economy, while still weak, may have hit bottom.

"The strong rise in the equity markets has sort of placed a dampener on safe-havens such as gold," said Adrian Koh at Phillip Futures.

"However, the dollar weakness will be key now. The sharp decline in the dollar on Friday 8 May has supported gold a bit given that the safe-haven play has somewhat diminished," he said.

Spot gold was at $915.90 an ounce at 0532, down 0.02 percent from New York's notional close of $916.05 on Friday 8 May.

U.S. gold futures for June delivery GCM9 were at $916.70 per ounce, up 0.2 percent from Friday 8 May's settlement at $914.90 on the COMEX division of the New York Mercantile Exchange.

With key events such as U.S. jobs data and the U.S. government's banks stress tests out of the way, investors are cautiously taking risks, traders said.

Adding to the emerging optimism about the global economy, the U.S. economy is expected to begin growing in the second half of this year, while the jobless rate is expected to peak in the first quarter of 2010, according to a survey of top forecasters released on Sunday 10 May.

China's central bank deputy governor Su Ning also said on Monday 11 May that the Chinese government's economic stimulus measures are having a clear effect in the first half of the year.

But for the time being, traders said gold prices looked set to hover near $920, a key resistance level for most of last month, before resuming their climb higher.

"Gold's in something of a standstill at the moment ... with investor popularity scattered among various investment instruments," said Koji Suzuki, a senior analyst at SBI Futures Co Ltd.

Reflecting a shift in investment away from safe-haven assets such as gold, holdings at the world's largest gold-backed exchange-traded fund, the SPDR Gold Trust XAUEXT-NYS-TT, stayed unchanged at 1,104.09 tonnes on May 8.

Global commodities exchange-traded fund manager ETF Securities said on Monday 11 May that gold prices were too high to encourage buying from the key jewellery sector.

Precious metals prices at 0530 GMT
Metal Last Change Pct chg YTD pct chg
Turnover
Spot Gold 916.00 -0.05 -0.01 4.07
Spot Silver 13.97 -0.01 -0.07 23.41
Spot Platinum 1143.50 -2.00 -0.17 22.69
Spot Palladium 242.00 3.50 +1.47 31.17
TOCOM Gold 2911.00 -19.00 -0.65 13.14
21312
TOCOM Platinum 3645.00 -51.00 -1.38 37.44
6914
TOCOM Silver 439.70 -3.80 -0.86 37.71
234
TOCOM Palladium 779.00 16.00 +2.10 41.64
689
Euro/Dollar 1.3630
Dollar/Yen 98.43
TOCOM prices in yen per gram, except TOCOM silver which is
priced in yen per 10 grams. Spot prices in $ per ounce.

(Additional reporting by Miho Yoshikawa; Editing by Ben Tan)