AFX: COMMODITIES-Gold slides but copper up after rate cut
LONDON, Oct 9 (Reuters) - Gold slid more than 2 percent on Thursday, with money moving back to stocks following a worldwide cut in interest rates -- an unprecedented move which also lifted copper and agricultural products.
Oil edged higher after earlier losses due to investor worries about falling demand as the global economy faces possible recession.
MSCI's main world stock index and European shares were up after central banks from China to Europe and the United States cut interest rates, helping ease fears about the worst financial crisis since the Great Depression.
'Over the last week we have seen flows into gold because people were so worried, but now after all the measures were taken yesterday the market is a little bit more stable so some of those flows are going into other assets,' said Helen Henton, head of commodity research at Standard Chartered.
Gold hit an intra-day high of $908.90 an ounce - near a 1-week high of $920 hit on Wednesday - before slipping to around $886.30 an ounce by 0943 GMT as stock markets gained.
Earlier it fell to a low of $884.15, down 2.5 percent.
A jump in holdings in the SPDR Gold Trust to a record of 763.90 tonnes on Wednesday reflected investor's growing interest in gold as a safe-haven asset. The SPDR is the world's largest gold-backed exchange-traded fund.
'There is a huge amount on uncertainty and until there is a clear sign of markets reliquifying they will remain anxious that economic activity is going to continue to be weak,' said Ian Henderson, a fund manager at JP Morgan.
'It would be naive to say that the world has not been affected by this financial tsunami.'
FOCUS TURN TO DEMAND
Crude oil was up $0.28 to $89.23 a barrel, but still near a 10-month low of $86.05 touched on Wednesday, as the coordinated rate cuts failed to ease recession concerns.
'People will start to focus on the outlook for demand, which now looks pretty poor,' Standard Chartered's Henton said.
A much larger than expected rise in U.S. crude and gasoline inventories underlined worries the economic crisis would hit oil demand, a concern that has sent crude falling about $60 a barrel from its record high above $147 in July.
London Metal Exchange copper futures bounced from a two-and-a-half year low.
Three-month copper firmed $80 a tonne to $5,320, but was still close to Wednesday's low of $5,212, its weakest since March 2006.
'Metals prices look likely to fall further as expectations for demand fall away,' said investment bank Fairfax in a report.
Prices have tumbled by almost a quarter in less than two weeks and despite the bounce prices were seen lower.
'Metals prices are taking their lead from equity markets in the current environment as an indicator for lower consumption and lower funding of industrial growth,' Fairfax said.
In agricultural markets, U.S. corn and wheat prices extended their rebound from year lows, aided by the tentative recovery on financial markets, while soybeans also gained as rains delayed the U.S. harvest.
'Some of the agricultural products are probably less tied to the economic cycle but we have seen some good harvests this year so the outlook for grains over the next six months is not hugely positive,' Henton said.
London robusta coffee futures nudged higher as they adjusted to stronger arabica prices after a late rally in New York on Wednesday, and traders saw renewed buying interest.
London January robustas were up $49 or 2.8 percent to $1,790 per tonne and ICE March raw sugar was up 0.39 cent or 3.28 percent to 12.28 cents a lb.
London white sugar futures rose in sympathy with raws on trade buying after the latest barrage of liquidations.
Cocoa futures rose early, buoyed by industry buying after recent falls, expectations of a global deficit again in 2009 and improving sentiment after Wednesday's rate cuts.
U.S. cocoa futures, which tumbled to close at a 6-month low on Wednesday as players holding long positions ran for the exits, rose early on Thursday, with benchmark December up $28 or 1.2 percent to $2,370 a tonne.
(Additional reporting by Lewa Pardomuan in Singapore, editing by Peter Blackburn) Keywords: MARKETS COMMODITIES
