ZURICH, Oct 1, 2008 (AFP) - Swiss mining giant Xstrata on Wednesday said it was dropping a bid for British platinum producer Lonmin in view of tightening credit and the ongoing financial turmoil.

But later on the same day, it said it had spent 440 million pounds (786 million dollars) acquiring 14.2 percent more of Lonmin during the day, bringing its total stake in the British firm to 24.9 percent.

Announcing the purchase, the group said it believed that the fundamentals of platinum are 'robust.'

Earlier, Xstrata chief executive Mick Davis said the group had decided to abandon a bid to acquire all of Lonmin 'against a background of extreme volatility and uncertainty in the financial markets.'

'The current lack of clarity and certainty regarding the future availability of credit introduces significant risks into the financing package available to Xstrata,' he added.

Xstrata in August sought to expand its global reach through a bid worth more than six billion euros (nine billion dollars) for Lonmin, but the British group turned down the takeover, saying it undervalued its business.

Xstrata was then asked by the British Takeover Panel to announce its intention on the offer by October 2.

While dropping the bid, Xstrata said its strategy to grow organically and through acquisitions 'remains intact and as relevant as ever.'