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By Steven Swindells
LONDON, Jan 30 (Reuters) - Platinum soared to its highest price in nearly 17 years on Thursday, boosted by U.S. President George W. Bush's call for more research into fuel cell technology.
Spot platinum traded at $673.00 an ounce, hitting levels not seen since September, 1986 and marking a rally that has taken the white metal from under $450.00 last year.
Bush called in his State of the Union speech on Tuesday for $1.2 billion to develop hydrogen-powered vehicles that would use platinum in fuel cells, sharpening the appetite of investment funds for the metal. "We've been hearing about fuel cells for ages and ages, but it seems the funds piled in after Bush's speech," a brokerage analyst in Tokyo said.
Fuel cells create electricity without pollution by combining hydrogen and oxygen into water. In his speech, Bush said fuel cells could not only reduce pollution from vehicles, but also reduce American dependence on imported oil.
"With a new national commitment, our scientists and engineers will overcome obstacles to taking these cars from laboratory to showroom -- so that the first car driven by a child born today could be powered by hydrogen and pollution free," Bush said in his speech.
While automakers have been touting the benefits of fuel cells, they have also warned that high costs and many technical hurdles must be overcome before fuel cells could replace internal-combustion engines in vehicles.
Despite these challenges, shares in leading companies that develop hydrogen fuel cells, such as Ballard Power Systems Inc. and Plug Power Inc. , have risen on prospects for greater use of fuel cells.
Shares in the world's leading platinum producer Angloplat in South Africa have also climbed on the rise in the price of the metal, which is now widely used in autocatalysts for cleaning vehicle exhaust fumes.
MORE GAINS SEEN
Some traders said prices for spot platinum, which is also widely used in jewellery, were set for further gains which could take it back to 1980 levels when spot prices hit $1,047.50.
By 1325 GMT, spot platinum had eased off the peaks and was quoted at $664.00/672.00 an ounce, little changed from $664.00/670.00 at the New York close on Wednesday.
Platinum is now at around levels not seen since 1986 when the South African government came under domestic political pressure to curb sales of the metal to the United States in retaliation for sanctions.
The metal soared in 1980 as traders bought it as a protection against rampant inflation.
Supply concerns for the metal have also underpinned prices.
Traders were keeping an eye on the world's fifth largest platinum producer, Russia's Norilsk Nickel , where management are in negotiations to avert a strike over pay.
Trade unionists and management agreed on Thursday to extend talks until Monday.
Lease rates, the cost of borrowing of the metal in international spot markets, have also risen.
Platinum one-month lease rates were averaging about 20 percent after having spent most of last year at around four to five percent, a London-based trader said.