Commodities fell for a second day after China raised banks’ reserve requirements, heightening speculation slower growth will curb raw materials demand. The Standard & Poor’s GSCI Index of 24 raw materials fell 0.7 percent to 676.03 by 2:27 p.m. London time after dropping 3.9 percent yesterday. Silver tumbled 4.7 percent. Crude oil declined 0.9 percent after the International Energy Agency cut its 2011 demand forecast. Reserve ratios will increase 0.5 percentage point from May 18, the People’s Bank of China said on its website today. It’s the fifth increase this year as the government tried to cool inflation. China’s inflation stayed above 5 percent in April, exceeding Premier Wen Jiabao’s 4 percent target, according to a government report yesterday. “Investors are increasingly fearful that Chinese demand for imported oil and materials will slow if efforts to contain inflation lead to slower growth,” Chris Weafer, chief strategist at UralSib Financial Corp., said by e-mail. Commodities have dropped 11 percent from a two-year high last month on speculation of slowing economic growth as governments raise interest rates to contain inflation. Global investors have tempered their optimism about the U.S. and world economies and plan to put more of their money in cash and less in commodities over the next six months, a Bloomberg survey found. Thirty percent of 1,263 investors, analysts and traders said they intend to reduce investments in commodities. $4 a Gallon Oil fell 66 cents to $97.55 a barrel in New York. The IEA trimmed its estimate of global fuel consumption by 0.2 percent, saying $4 a gallon gasoline is likely to lead to an “anemic U.S. driving season” that typically starts after Memorial Day in May. Gasoline dropped 1.2 percent to $3.0854 a gallon. Copper for delivery in three months fell 0.5 percent to $8,655.75 a metric ton. China is the world’s largest buyer of the metal. Gold for immediate delivery declined 0.3 percent to $1,496.60 an ounce. Silver futures traded on the Comex in New York slumped as much as 9.1 percent to $32.30 an ounce, after falling 7.7 percent yesterday. “It’s not surprising at all, given the importance of China, that commodities prices are under some pressure,” Jim O’Neill, chairman of Goldman Sachs Asset Management, who oversees $677 billion, told reporters in Hong Kong today. China’s expansion may slow to about 8 percent in June through December, he said. The economy grew 10.3 percent last year. -- With assistance from Sophie Leung in Hong Kong, Lynn Thomasson in New York and Rich Miller in Washington. Editors: Claudia Carpenter, John Deane To contact the reporter on this story; Maria Kolesnikova in London at mkolesnikova@bloomberg.net; To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net.

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