* Gold down more than 8 pct from April high * Funds cut bets on higher prices (Rewrites lead paragraph and headline; updates prices; adds comment, second byline, NEW YORK to dateline) By Renita D. Young and Peter Hobson NEW YORK/LONDON, July 2 (Reuters) - Gold slipped more than 1 percent to its lowest in 6-1/2 months on Monday ahead of a U.S. holiday, and platinum headed to its lowest in nearly 10 years as the greenback strengthened and an ongoing U.S.-European Union trade spat pressured precious metals. Fears of a trade war between the United States and China have helped weaken China's renminbi, the Indian rupee and Japan's yen against the dollar. A strong dollar makes greenback-priced gold more expensive for holders of other currencies. The dollar received another boost from better-than-expected U.S. manufacturing data. Its strength has helped to pressure spot gold by more than 8 percent from its April high of $1,365.23. Meanwhile, a deepening auto tariff spat between the United States and the European Union has caused more sales of autocatalyst metals platinum and palladium, traders said. Spot gold was down 0.8 percent at $1,242.01 per ounce by 2:20 p.m. EDT (1820 GMT). U.S. gold futures for August delivery settled down $12.80, or 1 percent, at $1,241.70 per ounce. Platinum was down 4 percent at $814 an ounce after touching its weakest since December 2008 at $804. Platinum was headed for its worse one-day drop in more than 2-1/2 years. The European Union has warned the United States that imposing import tariffs on cars and car parts would harm the U.S. automotive industry and likely lead to counter-measures on $294 billion of U.S. exports. "With the auto tariff threats, you will see it affect demand, so investors are selling platinum as a result," said John Caruso, senior market strategist at RJO Futures. Car sales will likely plummet, said Dillon Gage's Walter Pehowich. "Psychologically, it pulls back people who are wanting to buy platinum and palladium," he added. On Wednesday, July 4, trade will halt early at 1 p.m. EDT (1700 GMT) for the U.S. Independence Day holiday and there will be no settlement price. Investors awaited minutes of a June Federal Reserve meeting on Thursday and U.S. employment data on Friday. An aggressive tone by the Fed or strong jobs numbers could bolster the case for higher U.S. interest rates. Higher rates tend to strengthen the dollar and boost bond yields, reducing the appeal of non-yielding bullion. In other precious metals, silver was down 1.4 percent at $15.85 an ounce after hitting $15.73, the lowest in 6-1/2 months. Palladium lost 1.1 percent to $942.50 per ounce. (Additional reporting by Karen Rodrigues in Bengaluru Editing by David Goodman and Andrea Ricci)