Analysts have today issued further warnings concerning the potentially damaging effects of the Sars virus on platinum demand in China as jewellery sales continue to suffer.

John Reade, a metals analyst at UBS Warburg, told Reuters that if the virus continued to spread it could prove devastating for consumer demand for the precious metal.

'We believe that platinum is fairly priced at current levels, although we are becoming increasingly concerned about the impact of Sars on Chinese platinum demand,' he commented.

It is a view that is shared by those working within China such as jewellery executive Huang Xiaofang.

'Nowadays, there are only four or five customers in one morning where there used to be dozens,' Ms Xiaofang, sales director at Chow Tai Fook Jewellery, commented.

Joyce Shi, of the Platinum Guild International's marketing department in Shanghai, says the effects are becoming increasingly tangible, particularly in those areas affected worse by the virus.

'In some cases in Guangdong, platinum jewellery sales are down by 20 per cent, but the situation is getting better compared to Beijing, where there is Sars panic,' she explained.

Analysts now say it will be tough for platinum jewellery demand in China this year to match last year's strong output of 1.47 million ounces, a year in which demand grew by 13 per cent.