The structure and electronic properties of different terminations of the α-Fe(2)O(3)(0001) surface were studied with spin-polarized density functional theory (DFT) and the DFT + U method accounting for the effect of strong on-site Coulomb correlations. The results for lattice relaxation, electronic and magnetic properties are presented and discussed. Though the DFT and DFT + U methods provide qualitatively very similar surface geometries they differ very much in the prediction of the electronic and magnetic properties, and the surface energetics of the clean α-Fe(2)O(3)(0001). The most stable single iron terminated (0001) surface and the oxygen-rich termination were chosen to study Au and Pd atom adsorption. The results show that both Au and Pd bind strongly to hematite surfaces and induce large changes in their geometry. The DFT + U bonding is weaker by 0.3-0.6 eV than DFT on the iron terminated surface and about 2 eV stronger on the oxygen terminated one. The binding is stronger for Pd than Au and for both adsorbates is distinctly stronger at the oxygen than at the iron terminated surface. On the iron terminated surface the adsorption binding energy per adatom increases both with Au and Pd coverage, whereas for the oxygen terminated one the opposite trend is observed.