UPDATE 1-iShares Silver Trust bullion holdings hit record

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LONDON Jan 16 (Reuters) - The world's largest silver-backed exchange-traded fund, the iShares Silver Trust SLV.A, said its bullion holdings rose 1 percent to a record 7,143.27 tonnes on January 14.

The New York-based trust, which issues securities backed by physical stocks of silver, has increased its silver holdings by 2,300 tonnes or 48 percent year-on-year, according to data published on its website. (here).

Buying of silver bullion by ETFs has formed a major tranche of demand in recent years, helping to offset falling consumption in industry and from the photographic sector.

Investors have taken a greater interest in physical precious metals in recent months as volatility in other assets has led to increased risk aversion.

"We see this as driven by the safe haven story," said Standard Chartered analyst Daniel Smith. "We remain quite bullish on gold, and that is helping lift interest in silver. If you look at the gold-silver ratio, silver looks quite cheap."

Silver's appeal as a currency hedge and an alternative to gold is outweighing falling demand in other areas, he said.

"From an industrial perspective, demand is quite weak but I don't think people are focusing on that as much as where the dollar is likely to go, and where gold is likely to go," he said.

Spot silver XAG= was quoted at $10.75/10.83 an ounce at 1045 GMT. Standard Chartered sees silver prices averaging $12 an ounce in the fourth quarter.

(Reporting by Jan Harvey; Editing by Peter Blackburn)