* Platinum dips for seventh session out of eight
* Traders fear Volkswagen (XETRA:VOWG) scandal could hit auto demand
* Gold extends losses to third day (Rewrites with fresh platinum lows)
By A. Ananthalakshmi
SINGAPORE, Sept 29 (Reuters) - Platinum fell below $900 an ounce on Tuesday for the first time since January 2009 on fears that the Volkswagen emissions scandal would reduce demand from the auto sector.
Spot platinum XPT= slid to $899.80 an ounce, before paring some losses to trade at $902.99 by 0651 GMT.
The metal, which has fallen for seven sessions out of eight, has been hurt by news of Volkswagen AG's VOWG_p.DE falsification of U.S. vehicle emission tests as investors believe it could affect demand for diesel cars.
Platinum is widely used as a component in emissions-cleaning catalytic converters for diesel cars.
"We tend to think that platinum prices have been oversold in the face of the emissions concerns and worries about diesel vehicle sales going forward," said HSBC analyst James Steel.
"It strikes us that not enough attention is being given to the likelihood that tighter emissions legislation and increased vigilance by the auto makers will increase platinum demand," he said.
Upcoming European legislation on CO2 emissions will make it harder for the authorities to back a war on diesel, analysts have said. ID:nL5N11V32U
Meanwhile, palladium XPD= has gained as investors believe demand for gasoline cars could increase in the wake of the Volkswagen scandal. Last week, the metal hit its highest since mid-July.
Spot gold XAU= fell 0.4 percent to $1,127.16 an ounce, extending losses to a third session on worries that U.S. rates could increase this year.
A drop in Asian shares to 3-1/2-year lows failed to trigger any safe-haven bids for bullion. MKTS/GLOB
A flurry of planned appearances this week by Federal Reserve officials began on Monday, but conflicting views by policymakers only created more uncertainty.
William Dudley, head of the New York Fed, and John Williams, head of the San Francisco Fed, both signalled support for a rate hike this year. But Charles Evans, head of the Chicago Fed called for rates to stay near zero until mid-2016. ID:nL1N11Y2L9
Traders will also be keeping an eye on U.S. data, including non-farm payrolls due on Friday.
Non-interest-paying gold has lost about 4 percent this year on fears that demand could take a hit in a higher interest rate environment.
The drop in precious metals also comes amid a sell-off in the broader commodities market.
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. ID:nL5N11Z04
PRICES AT 0651 GMT
Metal
Last
Change Pct chg
Spot gold
1127.16
-4.49
-0.4 Spot silver
14.48
-0.08
-0.55 Spot platinum
902.99 -13.01
-1.42 Spot palladium
643.5
-0.5
-0.08 Comex gold
1126.9
-4.8
-0.42 Comex silver
14.5 -0.038
-0.26 Euro
1.1269
DXY
95.785
COMEX gold and silver contracts show the most active months