* Silver slides by most since October 2008
* Technical selling in thin condition compound slide
* Gold recoils after record high; PGMs lose ground
* Coming Up: Speech by U.S. President Obama; 0245 GMT (Recasts, adds details and quotes)
By Nick Trevethan
SINGAPORE, May 2 (Reuters) - Silver prices tumbled by 7 percent on Monday, the biggest loss since December 2008, with spot prices sliding to as low as $42.58 an ounce and futures dipping to $42.20 in a technically driven selloff compounded by thin trading conditions.
By 0213 GMT, spot silver stood at $44.63 an ounce,
down 6.6 percent on the day, while COMEX silver for July
delivery
Spot gold prices fell 1.1 percent to $1,546.39 an ounce, after earlier touching an all-time high of $1,575.79.
Markets across large parts of Asia and much of Europe were closed for May Day and Labour day holidays, reducing the number of market participants and making for volatile trade.
"Precious metals basically turned around in illiquid markets on snippets of news that suggest that the risk profile will change," said Jonathan Barratt, managing director at Commodity Broking Services in Sydney.
"Silver was also off the board in terms of technicals and the market decided to just smack it in the head."
Speculators scaled back their bullish bets in COMEX silver futures and options to the lowest level since early February, regulator data showed on Friday. [ID:nN29175149]
Speculators in COMEX silver held a net long position 25,791 lots in the week ending April 26, cutting 5,413 lots, data from the Commodity Futures Trading Commission (CFTC) showed.
The CME Group Inc said on Thursday it would raise maintenance margins for COMEX silver futures by 13.2 percent to $10,750 per contract from $9,500 effective Friday, April 29.
Some traders put silver's spectacular fall down to an unwind of a short gold-silver ratio position, compounded by automated stop-loss orders.
"There is nothing from a fundamental perspective to cause a fall this large. Silver has been the most rapidly appreciating of the metals in the past months and if there was one that looked a bit frothy it was silver," said Ben Westmore, commodities economist at National Australia Bank.
"This is mostly technical. We expect silver to be in relatively close step with gold and while both have risen strongly, silver may have moved a bit too far ahead."
But in spite of the falls, traders said it was too soon to close the book on silver's astounding 170 percent rally over the past 12 months.
"Although that was a brutal wash out of some length, silver is now back into the original bullish trend channel, so while $41 holds, the trend is still intact," one trader said.
In other precious metals with large-scale industrial applications, platinum fell 1.5 percent and palladium dropped 2 percent.
China's manufacturing growth slowed in April, a survey showed on Sunday, suggesting that the government's tightening efforts have weighed on the world's second-largest economy more heavily than expected. [ID:nL3E7G100E]
The official purchasing managers' index for China fell to 52.9 in April from 53.4 in March, well shy of market forecasts for an increase to 54.0.
Precious metals prices 0213 GMT Metal Last Change Pct chg YTD pct chg Volume Spot Gold 1546.39 -17.26 -1.10 8.94 Spot Silver 44.63 -3.17 -6.63 44.62 Spot Platinum 1836.24 -28.01 -1.50 3.89 Spot Palladium 773.72 -15.63 -1.98 -3.22 TOCOM Gold 4044.00 15.00 +0.37 8.45 50172 TOCOM Platinum 4830.00 14.00 +0.29 2.85 7166 TOCOM Silver 115.80 -10.60 -8.39 42.96 4820 TOCOM Palladium 2027.00 11.00 +0.55 -3.34 303 COMEX GOLD JUN1 1546.90 -9.50 -0.61 8.83 31075 COMEX SILVER JUL1 44.37 -4.23 -8.70 43.41 35365 Euro/Dollar 1.4803 Dollar/Yen 81.24 TOCOM prices in yen per gram. Spot prices in $ per ounce. COMEX gold and silver contracts show the most active months (Additiopnal reporting by Alejandro Barbajosa; Editing by Michael Urquhart)