Metals lead broad decline in commodity prices

AP News
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Posted: Mar 06, 2012 4:31 PM
Metals lead broad decline in commodity prices

Metals led a broad decline in commodity prices Tuesday as the prospect of slower global growth deepened concerns about future demand for everything from industrial metals to corn.

Investors are looking beyond more positive news about the U.S. economy to Europe and China, where there are signs of economic slowdown. In addition to metals, prices for energy products, wheat and corn also fell. The one bright spot was soybeans, which rose nearly 1 percent.

A key vote is set Thursday on Greece's bond swap deal, which is required before the financially troubled country can receive more bailout funding. Without additional money, many fear that Greece could default on its debt later this month, which could send shocks through financial markets and cause losses for banks that hold Greek debt.

Investors also are concerned that demand will be cut by the impact of cost-cutting measures taken by several European countries and China's lower economic growth target.

"Global growth fears now are hitting home and we're seeing selling across the board," Kingsview Financial analyst Matt Zeman said.

China's revised forecast of 7.5 percent economic growth, down from 8 percent, weighed on the commodities market for a second day because the country is such a huge importer of raw materials.

"Seeing disappointing numbers is going to have a big effect," Zeman said. "If China does continue to show signs of some drastic slowing, that's going to weigh on world markets, no question."

Economic issues in both Europe and China have dominated commodities markets for weeks, with many traders buying and selling contracts based on that day's headlines. Many sold holdings Tuesday and bought Treasurys and dollars, which are considered less risky assets, as they waited for the outcome of the Greek debt vote and the U.S. government's employment report due out Friday.

Industrial metals fell sharply. Copper is used to manufacture a vast array of products from pipes and wire for construction to electronic products. Platinum and palladium are known for their use in catalytic converters for cars.

Copper for May delivery fell a third day, ending down 12.2 cents, or 3.2 percent, to end at $3.7375 per pound. June palladium declined $35.35, or 5 percent, to finish at $671.60 per ounce and April platinum decreased $50.70, or 3 percent, to $1,611.90 an ounce.

April gold fell $31.80 to end at $1,672.10 per ounce and May silver declined 91.2 cents to $32.783 per ounce.

In energy trading, oil prices fell after Iran agreed to let international nuclear inspectors into its facilities. Oil has surged this year because of supply concerns stemming from a dispute between some Western countries and Iran over its nuclear program.

Benchmark crude fell $2.02 to finish at $104.70 per barrel in New York. Heating oil fell 2.92 cents to end at $3.1882 per gallon, gasoline futures fell 2.81 cents to $3.2299 and natural gas fell 1 cent to $2.462 per 1,000 square feet.

In May agricultural contracts, wheat fell 14.25 cents to finish at $6.5775 per bushel, corn declined 6.75 cents to $6.54 per bushel and soybeans rose 10.25 cents to $13.3525 per bushel.