Aug. 1 (Bloomberg) -- Platinum fell the most in four months in New York on speculation that demand from the auto industry, which accounts for most consumption, will drop while output has stabilized. Palladium also declined.

U.S. auto sales may have remained at the lowest annual rate in 15 years last month, a Bloomberg survey of 40 analysts showed. That fueled concerns demand will decline for platinum and palladium for auto-emissions control parts. Production in South Africa, the source of 78 percent of the world's supply, has stabilized after power shortages disrupted mines in January.

``The rout in platinum-group metals continued to unfold,'' Jon Nadler, a senior analyst at Kitco Minerals & Metals Inc. in Montreal, said in a note. ``Automotive-sector news and a brighter supply outlook out of South Africa continue to present a hurdle to price advances.''

Platinum futures for October delivery tumbled $106.60, or 6.1 percent, to $1,655.30 an ounce on the New York Mercantile Exchange, the biggest one-day drop since March 7. The most- active contract slid 5.9 percent this week, the third straight weekly decline.

Palladium futures for September delivery sank $12.40, or 3.2 percent, to $371.10 an ounce. The price dropped for a sixth consecutive week, declining 3.1 percent. Most-active futures fell 17 percent last month, the biggest such drop since a 22 percent plunge in March.

General Motors Corp., Ford Motor Co. and Toyota Motor Corp.'s U.S. sales declined last month as record gasoline prices depressed demand for trucks and large vehicles and a slowing economy kept consumers away from dealer lots. Ford reported a 15 percent drop from a year earlier. Toyota's sales fell 12 percent. GM posted a 27 percent plunge.

`Hit Its Top'

``Platinum group metals have been hit the strongest as investors believe it hit its top and want to be in the more liquid gold, where they can get in and out quickly,'' Miguel Perez-Santalla, a sales vice president at Heraeus Precious Metals Management in New York, said today in a note. ``With platinum below $1,700 an ounce, we are sure to see good industrial buying down here.''

Platinum, which gained 36 percent this year through June, tumbled 15 percent in July, partly because of slumping car sales. It was the biggest one-month plunge since December 1988.

Platinum reached a record $2,308.80 on March 4, partly because of output cuts in South Africa. Still, by May, metal output, except for gold, rose at a 2.6 percent annual pace, according to Statistics South Africa.

Platinum fell as the dollar rose against the euro, following a government report today that showed U.S. employers eliminated fewer jobs last month than analysts had forecast. Some investors sell metals priced in dollars, including platinum and palladium, when the U.S. currency gains.

Dollar Strengthens

The dollar rose as much as 0.6 percent against the euro, heading for its biggest weekly gain since June 13. The dollar traded at $1.5541 per euro at 3:33 p.m. in New York, up 3.1 percent from a record low reached on July 15 against the 15- nation currency.

``Dollar traders are also anticipating further strength in the currency as conditions in Europe continue to pressure the euro towards the $1.54 level,'' Kitco's Nadler said in the note.

To contact the reporter on this story: Halia Pavliva in New York at hpavliva@bloomberg.net.

Last Updated: August 1, 2008 16:09 EDT