UPDATE 7-Gold ends lower as oil plummets, stocks recovers

* Oil's sharp fall weighs heavily on gold

* Market fears, initial dollar weakness support gold early

* Platinum at lowest level since early May (Recasts, updates prices, market activity to New York close; adds second byline, dateline, previously LONDON)

By Frank Tang and David Sheppard

NEW YORK/LONDON, July 17 (Reuters) - Gold ended a volatile session lower on Thursday as heavy losses in crude oil hit bullion's inflation appeal and as global stock markets rose on signs of financial stability.

Spot gold <XAU=> was at $962.10/963.10 an ounce by New York's last quote at 2:15 p.m. EDT (1815 GMT), against $963.10/964.10 late in New York on Wednesday. It had traded as high as $978.25.

"Crude breaks, stocks rally and we are starting to lose a little luster in gold," said Frank McGhee, head precious metals trader at Integrated Brokerage Services in Chicago.

McGhee said gold's rally last week was driven largely by fears in financial markets, but those worries seemed to have disappeared.

"If the dollar starts firming on the stock rally, then the gold will take a fairly significant letdown," McGhee said.