Commodities fall on Europe's debt crisis

AP News
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Posted: Sep 09, 2011 3:41 PM
Commodities fall on Europe's debt crisis

Most commodity prices fell Friday as concerns about Europe's sovereign debt crisis deepened after a key European Central Bank official resigned.

Copper and palladium each fell more than 3 percent while oil dropped 2 percent. Gold, corn and soybeans were among the few products that rose by the end of the session.

Juergen Stark's resignation from the central bank came amid disagreements over how the region's debt problems have been managed. That has increased concerns about the already sluggish global economy and future demand for commodities.

The dollar also hurt commodities as it strengthened against the euro. Since commodities are priced in dollars, a stronger dollar makes them more expensive for investors who buy and sell in other currencies.

Uncertainty about what lies ahead for the economy prompted investors to sell holdings ahead of the weekend, MF Global senior market strategist Rich Ilczyszyn said.

Some bought assets that are considered more stable during uncertain economic times, such as gold. "I think that's a bit of a safety play...because you don't know where to put your money," he said.

In addition, investors were evaluating the prospects that Congress would support President Barack Obama's proposed $447 billion package designed to promote job growth.

Except for gold, metal prices ended lower. December copper fell 14.10 cents, or 3.4 percent, to end at $4.0025 per pound, October platinum dropped $16.60 to $1,837.90 an ounce and December palladium declined $26.70, or 3.5 percent, to $738.60 an ounce.

In other December contracts, gold rose $2 to end at $1,859.50 an ounce and silver fell 90.6 cents to $41.624 an ounce.

Wheat, corn and soybeans were mixed ahead of a report due out Monday that will provide the latest government updates on global crop supplies and demand. Some analysts expect it to show a decline in U.S. acreage for corn and soybeans because of weather-related issues.

December wheat fell 8.25 cents to end at $7.2975 per bushel, December corn rose 2.5 cents to $7.365 per bushel and November soybeans rose 8.5 cents to $14.2675 per bushel.

In energy trading, benchmark oil dropped $1.81 to end at $87.24 per barrel on the New York Mercantile Exchange. Heating oil fell 5.85 cents to finish at $2.9858 per gallon, gasoline futures fell 11.42 cents to $2.771 per gallon and natural gas fell 6.5 cents to end the day at $3.915 per 1,000 cubic feet.