(Adds London close para 3, COMEX prices 6, Norilsk update 8)
By Clare Black
LONDON, Jan 22 (Reuters) - Platinum rose just under three percent on Wednesday to its highest price in nearly 17 years, as investment funds bought on fears of supply disruptions from major producers, and it remained firm at its close in Europe.
The precious metal was set or "fixed" in the London morning session at $648.00 an ounce, its highest level since September 1986, according to Reuters data.
By the end of European trading at 1615 GMT, spot platinum was quoted at $644.00/651.00 an ounce, up 2.3 percent from New York's Tuesday close of $629.50/636.50.
"The move appears to have been driven by speculative buying on the New York and Tokyo futures exchanges. This is uncharacteristic as recent rallies...have been led by tightness in the forward market," John Reade, precious metals analyst with UBS Warburg said.
Although the higher prices seemed to have driven consumers on to the sidelines, analysts were predicting that supply would be unable to keep up in 2003 with buoyant demand for the metal, widely used in the jewellery and autocatalyst industries.
New York platinum futures were also spurred higher with April trading up to $637.40, the highest since May 2001. It was quoted at $635 an ounce, up $10 by 1630 GMT.
Rumours of supply interruptions in the world's top producer South Africa and number two Russia have fuelled the rally, analysts said.
An accident and subsequent explosion in late December has disrupted production at the Western Platinum smelter owned by South Africa's Lonmin Plc -- the world's fourth largest producer.
Meanwhile, number five producer, Russian metals giant Norilsk Nickel , is grappling to avert a pay strike.
The head of the biggest union at Norilsk said on Wednesday it had agreed with the company's management to meet on Friday to negotiate a settlement.
"Market participants are waiting for a news release from Lonmin on Friday concerning its new production targets following the explosion," Barclay's Capital metals analyst Ingrid Sternby said.
UBS Warburg's Reade did not think the two issues would lead to supply disruption.
"Lonmin has made alternative arrangements to smelt its production through Implat's smelter. And our analyst in Russia does not expect any interruptions from the Norilsk industrial relations rumbling," he said.
CONSUMER BUSINESS DRIED UP
Although brokers and analysts were looking for higher price levels, they said that consumer business had dried up.
"I think Chinese consumers, who represent a large part of demand would be reluctant to buy at current high levels," Sternby said.
A recent Reuters precious metals global survey of 21 analysts forecast an average platinum price of $612.50 an ounce in 2003, up 13 percent on an average $542.00 in 2002.
Sternby said in her contribution to the poll that strong end-use demand would keep prices firm throughout 2003.
"We believe the inability for new mine supply to meet this growing demand will produce several years of deficit, despite growth in secondary availability," she said.
According to historical data from UK-based refiner Johnson Matthey, platinum was fixed at a peak of $663.75 an ounce in early September 1986.
In 1980, the metal soared from $750 on January 2 to reach $1,047.50 on March 5, before subsiding equally rapidly to $500-600 in April of that year.