LONDON - Holdings of ETF Securities' US-based platinum exchange-traded fund rose 10% on Friday, while those of its US palladium product climbed by a third, the company said on Monday.

The inflows reflect sales made two or three days prior to the recorded date at which the metal is received by the custodian, ETF Securities added.

The platinum fund now now holds 164 874 oz of metal, while the palladium product holds 279 956 oz. ETFs issue securities backed by physical stocks of a given asset, giving the buyer exposure to the underlying price of the material.

The launch of the two products, the first of their kind in the United States, has been a major factor in palladium's 7% rise and platinum's 5% climb so far this year.

Both metals hit their highest since mid-2008 last week as investment demand surged, and traders worried the products would lead to a squeeze of available material in the market.

Investors' interest in the metals has been piqued by expectations for a recovery in car sales this year after a soft 2009. Over half of available platinum and palladium supply is consumed by carmakers for use in autocatalysts.

"These are the first physically-backed products listed in the United States, and there has been a huge amount of pent-up demand," said Nicholas Brooks, ETF Securities' head of research.

"A lot of investors look at platinum and palladium as an excellent medium- to long-term play on emerging market demand for automobiles," he added.

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