Watts, who was 69, was born in Birmingham, but spent some of his early years in Worthing. He lived in Palatine Road and went to Worthing High School in the late 1950s/early 60s before moving to Herefordshire.
His record label confirmed he died on Sunday of cancer.
Watts played bass on songs including Roll Away The Stone and the group’s best known hit, All The Young Dudes, written and produced by David Bowie.
Barnham songwriter and producer Robin Mayhew did the sound for Mott the Hoople for a couple of years in the 1970s, straight after he’d worked with Bowie himself. Bowie famously wrote All the Young Dudes for the band at a time when they were struggling for success.
Robin recalls: “Pete Overend Watts was the more glamrock one of the band. All of that glamrock was starting, and he was probably more glamrock than the others. He would always wear the big flared trousers and the funny coloured tops! Mick Ralphs in the band was more rock ‘n’ roll and left for Bad Company with Paul Rodgers. But I did the sound for Mott the Hoople for a couple of years. When we did the tour for All The Young Dudes, the support band was Queen!
“Mott the Hoople were a very good band. (Lead singer) Ian Hunter used to announce the fact that there were two great rock ‘n’ roll bands in the world. He would say that The Rolling Stones were one – and that Mott the Hoople were the other!”
Watts lived near Ross-on-Wye in Herefordshire
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