* Platinum dips for seventh session out of eight
* Traders fear Volkswagen (XETRA:VOWG) scandal could hit auto demand
* Gold extends losses to third day
(Updates throughout, changes dateline, pvs SINGAPORE)
By Jan Harvey
LONDON, Sept 29 (Reuters) - Platinum prices fell below $900
an ounce on Tuesday for the first time since January 2009, hurt
by fears that the Volkswagen emissions scandal would cut demand
from carmakers and perceptions that the market remains
oversupplied.
The metal has been hit by last week's revelations that
Volkswagen AG 's VOWG_p.DE falsified U.S. vehicle emission
tests, which some believe could affect demand for diesel cars.
Platinum is widely used in autocatalysts, particularly in the
diesel sector.
Spot platinum XPT= was down 1.3 percent at $904.30 an
ounce by 0930 GMT, having earlier hit a low of $894. The metal
is on track for its biggest monthly loss since 2011 in
September, and its steepest quarterly plunge in seven years.
Even before the Volkswagen scandal broke last week, it had
been suffering from a ramp-up in mine supply after last year's
five-month strike among platinum miners in major producer South
Africa, and weakness in Chinese jewellery demand.
"Clearly what happened with Volkswagen has hit sentiment,"
Citi analyst David Wilson said. "(But) we also have a supply
side that doesn't seem to be adjusting to the lower price
environment ... in South Africa it is very difficult to cut
production."
"Platinum has been on a downward trend for over a year now,
partly because of the massive removal of investor money from the
platinum group metals space," he said. "I think right now
everyone is just grabbing onto any news that is negative, and
that's driving sentiment."
Platinum's drop and falls in other precious metals comes
amid a sell-off in the broader commodities market, which helped
to drive global stocks to their lowest in more than two years.
Shares in commodity trading firms were hit hard and a
Japanese shipper filed for bankruptcy on Tuesday, in the latest
signs that tumbling energy and raw material prices are
triggering a sector-wide crisis.
Platinum's discount to gold reached its widest since August
2012 at $224 an ounce, despite a drop in gold prices. Spot gold was down 0.6 percent at $1,125.33 an ounce, while U.S.
gold futures for December delivery were down $6.50 an
ounce at $1,125.20.
Gold has come under pressure from uncertainty over the
timing of the Federal Reserve's first rate hike in nearly a
decade. Conflicting views by policymakers, several of whom are
scheduled to speak this week, have created more uncertainty.
"Fed policy has been instrumental in influencing gold prices
for many months," HSBC said in a note.
Silver XAG= was down 0.1 percent at $14.52 an ounce,
while palladium XPD= was down 0.4 percent at $641.25 an ounce.