(Updates with quotes, prices)
By Atul Prakash
LONDON, May 9 (Reuters) - Platinum pared gains on Friday as
investors took profits from its 4 percent jump earlier in the
day to a seven-week highs on reports of the launch of platinum
exchange traded notes (ETNs).
Other metals changed course to decline in the afternoon
trading session, with gold falling more than 1 percent, silver
shedding 2 percent and palladium losing 0.6 percent.
Investment bank UBS <UBSN.VX> launched two ETNs offering
long and short trading strategies in platinum. ETNs, unlike
exchange-traded funds, do not purchase physical platinum to back
the number of shares sold.
The two ETNs -- UBS E-Tracs Long Platinum ETN <PTM.P> and
UBS E-Tracs Short Platinum ETN <PTD.P> -- started trading on
Friday on the NYSE Arca platform.
"It won't have an impact on the availability of physical
metal nor on lease rates. Fundamentally you cannot justify the
kind of price move we have seen," said Tom Kendall, metals
strategist at Mitsubishi Corporation.
But it offers another route by which U.S. mutual and pension
funds, which cannot directly invest in commodity derivatives,
can gain exposure to platinum, he added.
Spot platinum <XPT=> rose to a high of $2,095 an ounce
before falling to $2,047/2,067 at 1447 GMT, compared with
$2,008.50/2,028.50 in New York late on Thursday.
Dealers also reported platinum purchases in Japan and Europe
as auto makers stocked up for their second-quarter requirements,
but the metal was still more than $200 below a lifetime high of
$2,290 an ounce hit on March 4.
"People just read about the new products and started buying
platinum, but I think it's overdone here," said Wolfgang
Wrzesniok-Rossbach, head of marketing and sales at Heraeus, a
German precious metals trading group.
TOKYO FUTURES SURGE
Platinum's major industrial use is in making autcatalysts,
particularly diesel catalysts, as it helps clean environmentally
damaging fumes from exhausts. It is also used in jewellery.
"While the UBS ETNs do not directly invest in the
underlying, the reality is that the market makers of the product
need to hedge their short exposure to investors who are very
likely to be long given the bullish medium term outlook," J.P.
Morgan said in a report.
"As such we can expect that investors and market makers will
continue to be net buyers of platinum."
In other markets, the most active Tokyo platinum contract
jumped by the daily 300 yen limit. The benchmark contract for
April 2009 delivery <0#JPL:> rallied to 6,703 yen per gram, but
still below a record of 7,427 yen hit on March 6.
Spot gold <XAU=> hit a one-week high of $889.80 an ounce on
a weaker dollar and record high oil prices, but slipped as oil
retreated. The metal was last quoted at $874.90/875.90, against
$881.40/882.60 in New York late on Thursday.
In the physical market, steady purchases from jewellers in
Indonesia, Thailand and Vietnam pushed up premiums for gold bars
to 80 U.S. cents an ounce to the spot London prices in
Singapore, from 75 cents last week <GOLD/ASIA1>.
But output and exports of jewellery from Italy, Europe's
biggest producer, would fall this year owing to high gold prices
and a weakening global economy, Stefano de Pascale, director of
Italian goldsmiths' body Federorafi, said. []
In other precious metals, gold futures for June delivery
<GCM8> on the COMEX division of the New York Mercantile Exchange
fell $6.40 an ounce to $875.70.
Silver <XAG=> fell to $16.56/16.62 from $16.85/16.91 an
ounce, while spot palladium <XPD=> was flat at 430.50/438.50
after falling as low as $427 an ounce.
(Reporting by Atul Prakash; Editing by Daniel Magnowski)
