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BLBG: Platinum Tumbles Most in a Week Since 1986 on Auto Sales Slump
By Halia Pavliva

Oct. 3 (Bloomberg) -- Platinum fell, capping the biggest weekly drop in 22 years, and palladium plunged on concern auto sales in emerging markets will falter, further reducing demand for the metals used in car parts.

Automakers account for more than 60 percent of global platinum use, according to London-based metals trader Johnson Matthey Plc. Platinum fell 58 percent from a March record as auto sales plunged in the U.S., the world's biggest market, and weakened in Europe, stoking concern that emerging markets, including China, may also decline.

``Platinum continued to suffer as the automotive sector looks increasingly vulnerable to the global economic contraction,'' Jon Nadler, a senior analyst at Kitco Metals & Minerals Inc. in Montreal, said today in a note to clients. ``Credit markets remain in a state of suspended animation.''

Platinum futures for January delivery slid $20.80, or 2.1 percent, to $965.80 an ounce on the New York Mercantile Exchange. The most-active contract plunged 14 percent this week, the steepest weekly drop since September 1986.

The price earlier touched $956.20, the lowest since Dec. 22, 2005. Automakers reported the lowest monthly U.S. sales in 17 years this week.

Platinum fell 50 percent in the third quarter and 31 percent last month, the worst monthly decline since at least 1986. The most-active contract reached a record $2,308.80 on March 4.

Palladium futures for December delivery fell $1.35, or 0.7 percent, to $201.85 an ounce in New York. The price plummeted 56 percent in the third quarter and 34 percent last month, also the biggest such decline since at least 1986. Most-active futures dropped 10 percent this week and are down 47 percent this year.

Global Slowdown

``The dominant sentiment in the commodity markets now reflects the belief that we are heading into a synchronized global slowdown or even recession,'' Edward Meir, an analyst at MF Global Ltd. in Darien, Connecticut, said today in a note to clients.

U.S. auto sales plunged the most last month since January 1991, according to Ward's Auto Forecast in Southfield, Michigan. The September results extended the industry's slide to 11 consecutive months, the longest in 17 years.

Executives from Bayerische Motoren Werke AG of Germany, Dearborn, Michigan-based Ford Motor Co. and France's Renault SA said yesterday that a slump in car sales may be more prolonged than manufacturers have anticipated.

Auto sales also slid in Europe, dropping 16 percent in August, the biggest monthly decline since 1999. Demand is slackening in Russia, as well as in other emerging markets in eastern Europe and in Brazil, where carmakers have been expanding capacity.

Lawmakers in the U.S. House of Representatives passed a $700 billion rescue plan for financial companies, designed to unlock credit markets, reversing an earlier vote that sent global markets plunging and threatened to deepen an economic slowdown. President George W. Bush praised the vote and said he will sign the measure when he receives it.

To contact the reporter on this story: Halia Pavliva in New York at hpavliva@bloomberg.net.