Commodities tumbled today, with copper falling from a record and oil slipping from a two-year high on speculation China may attempt to rein in inflation by raising interest rates, curbing demand in the biggest consumer of metals and energy. Cotton, zinc and soybeans also slid. Copper for three-month delivery on the London Metal Exchange fell as much as 2.8 percent to $8,583.25 a metric ton, and traded at that level by 3:54 p.m. Singapore time. The contract, which reached a record $8,966 a ton yesterday, is down 0.8 percent this week. Oil futures fell $1.9, or 2.2 percent, and were set for a weekly drop. Asian equities and U.S. stock-index futures also slid on concern China may raise interest rates for the second time in two months as consumer prices jumped 4.4 percent in October, the fastest pace in two years. Most China commodity prices tumbled by the exchange-set limits. “The recent tightening including the reserve-ratio hike this week fueled more expectation that China will accelerate the pace it increases interest rates,” Tian Feng, analyst at BOC International (China) Ltd., said by phone from Shanghai. The People’s Bank of China boosted its benchmark one-year lending rate on Oct. 19 by a quarter of a percentage point to 5.56 percent, the first increase since 2007. The central bank may raise interest rates within weeks, a Bloomberg News survey of economists showed. The central bank on Nov. 10 ordered an increase in bank reserve requirements by 50 basis points from Nov. 16, the first nationwide increase since May. Some lenders, including Bank of Communications Co., have to increase their reserve ratios by an additional 50 basis points from Nov. 15, a person with direct knowledge of the matter said yesterday. Rate Speculation “There’s talk of an interest-rate hike over the weekend,” said Wu Kan, a Shanghai-based fund manager at Dazhong Insurance Co., which oversees $285 million. “It’s quite possible given how inflation has accelerated.” Zinc for delivery in three months in London fell 4.7 percent, the most in two months, to $2,422.50 a ton and cotton declined by as much as 3.6 percent to $1.3418 a pound on ICE Futures U.S. in New York, dropping for a third day. Cotton and copper gained to records this week on strong China demand and sugar rose to a 29-year high on concern that India may cap exports. Soybeans for January delivery on the Chicago Board of Trade reached the highest level in more than 26 months today before slumping 3.8 percent to $12.8875 a bushel. ‘Panic Selling’ “Investors took profits after the recent rally in commodities prices,” Judy Zhu, analyst at Standard Chartered Bank, said by phone from Shanghai. “The rumor that China may raise interest rates also contributed to the general panic selling.” The MSCI Asia Pacific Index lost 1.4 percent to 132.32 as of 4:03 p.m. in Singapore and the Shanghai Composite Index sank the most since August 2009. Standard & Poor’s 500 Index futures slid 1.2 percent. Gold fell for the first time in three days as concern that some European governments are struggling to finance themselves boosted the dollar against the euro, eroding the metal’s appeal as an alternative asset. Silver, platinum and palladium also declined. Immediate-delivery gold lost as much as 1.8 percent to $1,382.68 an ounce. The metal, which touched an all-time high of $1,424.60 on Nov. 9, is headed for the first weekly drop in three weeks. Cash silver slumped as much as 3.7 percent to $26.6712 an ounce. China Tumbles Commodities in China including copper, zinc, cotton, sugar, rubber, corn and soybean prices fell by the daily limits on concern another rate hike and additional sales from reserves would damp demand. Cotton for May delivery on the Zhengzhou Commodity Exchange fell by the 7.5 percent limit to 29,290 yuan a ($4,418). Sugar for September delivery declined by 5 percent to 6,895 yuan. “The government already sold stockpiles of cotton, sugar, aluminum and zinc, and there’s speculation that it may do more to suppress prices and contain inflation,” BOC’s Tian said. “There’s also market speculation that the government may sell additional sugar stockpiles, as well as soybean stockpiles.” Soybeans for September delivery dropped the 4 percent limit to 4,584 yuan a ton on the Dalian Commodity Exchange. Copper and zinc on the Shanghai Futures Exchange slid the 5 percent limit to 65,640 yuan a ton and 19,935 yuan, respectively. --Feiwen Rong. With assistance from Chua Kong Ho in Shanghai, Glenys Sim in Singapore and Luzi Ann Javier in Singapore, Sungwoo Park in Seoul. Editors: Richard Dobson, Jarrett Banks. To contact the Bloomberg News staff on this story: Feiwen Rong in Shanghai at fron2@bloomberg.net To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net

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