* Platinum, palladium hit lowest since early February
* Gold arrests this week's slide as debt fears persist
* Equities weak, 'fear' index hits highest since Mar 09
(Updates prices and comments)
By Jan Harvey
LONDON, May 21 (Reuters) - Platinum and palladium recovered
sharply from losses that took them to 3-1/2 month lows on
Friday, but are still on track for their biggest weekly
percentage loss since late 2008 due to fund selling.
Gold was steadier, arresting a slide that took it to
two-week lows earlier in the session, as lower prices tempted
some buyers back to the market amid persistent fears over the
euro zone debt crisis.
Spot gold <XAU=> was bid at $1,177.55 an ounce at 1450 GMT,
against $1,181.10 late in New York on Thursday. U.S. gold
futures for June delivery <GCM0> on the COMEX division of the
New York Mercantile Exchange fell $10.4 to $1,178.10 an ounce.
Platinum <XPT=> was at $1,500.50 an ounce against $1,509
after earlier falling around 15 percent from last Friday's
level. Palladium <XPD=> was at $431.25 versus $412.75, after
falling to $393, down 25 percent on the week.
"Risk aversion and fears of contagion have weighed on the
PGMs alongside the rest of commodities complex," analyst Suki
Cooper at Barclays said, but added that from a fundamental point
of view there has been positive news flow.
"Johnson Matthey painted a picture where we had platinum
closer to balance in 2010 compared to 2009 and they did
highlight they expect a surplus in palladium smaller than last
year as well," she said.
In its closely watched Platinum 2010 report, platinum
refiner and specialist Johnson Matthey Plc <JMAT.L> said it
expects demand to strengthen as global auto production recovers
this year and again in 2011.
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For stories on Platinum Week in London, click on:
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For a story on platinum and palladium heading for their
biggest one-week percentage drop since October 2008,
click on: []
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Gold prices recovered after earlier falling to a low of
$1,166.50 an ounce, down more than 5 percent from last Friday.
Traders say prices are due a period of consolidation after
rising 6 percent in the first two weeks of May to record highs
at $1,248.95 an ounce.
"We traded up from $1,125 to the high at $1,248 not even in
a month, so it is quite normal that you have a movement against
that," said Commerzbank trader Michael Kempinski.
"There is really too much investor money in there, and the
funds are not all interested in the long term performance."
SOVEREIGN DEBT
Fear remains a driving force in the market. The VIX index
<.VIX>, Wall Street's chief measure of volatility, closed at its
highest since March 2009 on Thursday on growing fears over the
euro zone's handling of its sovereign debt problems.
European shares hit their lowest in over eight months on
Friday. []
The euro <EUR=> clung to gains against the dollar as fears
of currency intervention rose. Oil prices fell below $70 a
barrel, having touched their lowest since July on Thursday.
[] []
Investment demand for physical gold continued to be firm.
Holdings of the world's largest gold-backed exchange-traded
fund, New York's SPDR Gold Trust <GLD>, hit a record 1,220.152
tonnes on Thursday. []
The gold exchange-traded products operated by London's ETF
Securities were also little changed on Thursday.
The resilience of ETF holdings during gold's latest leg
lower has cheered investors who believe the longer-term outlook
for the metal against a backdrop of volatility in the wider
markets and rising fears over euro zone debt levels is positive.
"My view is still that in a period of strong monetisation by
governments, it will come out as the only real store of value,"
said Nick Bullman, managing director of Bullman Asset
Management.
Silver <XAG=> was bid at $17.70 an ounce against $17.59.
(Additional reporting by Humeyra Pamuk, Editing by sue Thomas)
