(Updates with context on Steyer paras 10-12)

By Rory Carroll

SAN FRANCISCO, May 7 (Reuters) - Stanford University said on Tuesday it will no longer use any of its $18.7 billion endowment to invest in coal mining companies, a move aimed at combating climate change that could influence college administrations elsewhere.

The university's board of trustees agreed with recommendations from a panel of students, faculty, staff and alumni that found investments in alternatives to coal would be less harmful to the environment.

The burning of coal for electricity is a major contributor to the output of heat-trapping greenhouse gas emissions globally.

The Stanford announcement is the most significant to date from a major, well-endowed college or university in the United States amid a growing movement by students around the country to pressure their institutions to divest from fossil fuels.

"The university's review has concluded that coal is one of the most carbon-intensive methods of energy generation and that other sources can be readily substituted for it," said Stanford President John Hennessy.

It was announced on the same day the White House released a report warning that climate change was already affecting the United States in the form of more severe droughts in some areas and more intense storms in others.

He added that Stanford, which is located on the edge of Silicon Valley, is working to develop sustainable energy sources.

The resolution means that Stanford will not directly invest in approximately 100 publicly traded companies for which coal extraction is the primary business, and will divest of any current direct holdings in such companies, the university said.

Stanford also will recommend to its external investment managers, who invest in wide ranges of securities on behalf of the university, that they avoid investments in publicly traded coal mining companies as well.

Billionaire hedge fund investor-turned-environmental activist Tom Steyer, who has supported a number of colleges in their campaign to purge coal investments, is an alumnus of Palo Alto-based Stanford, a member of its board of trustees and founder of two clean energy research institutes on campus.

Amid growing pressure from students and environmentalists, a number of smaller institutions such as San Francisco State University and Hampshire College in Massachusetts have agreed recently to shed their coal holdings.

Students at other colleges including Brown University and Middlebury College have also led divestment campaigns, with Steyer's support, although both rejected the bids.

CHEERS STUDENTS

The announcement was cheered by a student-led organization known as Fossil Free Stanford, which petitioned the university last year to cut ties with the coal mining industry.

"We are proud that our university is responding to student calls for action on climate by demonstrating leadership," the group said in a statement. "Stanford's commitment to coal divestment is a major victory for the climate movement and for our generation."

Jay Carmona, divestment campaign manager for 350.org, said he hopes Stanford's decision will influence other universities.

"Now that one of the biggest endowments on earth has acknowledged that it can't keep investing in climate change, others can follow," he said.

Stanford does not disclose specific investments in its portfolio nor their individual value, though it provides information on endowment holdings and performance by broad asset category.

The total value of the endowment was $18.7 billion as of Aug. 31, 2013, the close of the 2012-13 fiscal year. (Reporting by Rory Carroll; additional reporting by Valerie Volcovici in Washington)