Oct. 3 (Bloomberg) -- Commodities fell to a 10-month low as signs of a contraction in European manufacturing signaled slowing demand for raw materials. The Standard & Poor’s GSCI Spot Index dropped as much as 1.8 percent to 580.29, the lowest since Dec. 1, and was down 1.4 percent at 2:14 p.m. in London. The gauge tumbled 12 percent in the third quarter, the most since the final quarter of 2008. Copper, corn and sugar led declines today. A manufacturing gauge based on a survey of purchasing managers in the 17-nation euro region fell to 48.5 from 49 in August, London-based Markit Economics said today. A reading below 50 indicates contraction. Europe accounts for 19 percent of global copper demand and 22 percent of nickel, used to make stainless steel, according to Barclays Capital. “Deteriorating leading economic indicators point to commodity demand risks,” H. Fraser Phillips, an analyst at RBC Dominion Securities Inc. in Toronto, said in a presentation in London today. “A significant slowing in global economic growth could lead to a weakening in commodity demand in the near term.” The S&P GSCI Index has dropped 24 percent since April, meeting the common definition of a bear market. The U.S. and most of the euro region are already in recession, Nouriel Roubini, the economist who predicted the U.S. housing bubble that started the last slump, told the Bloomberg Dealmakers Summit in New York on Sept. 27. Crude Drops Oil for November delivery declined 1.8 percent to $77.37 a barrel on the New York Mercantile Exchange. Crude lost 17 percent last quarter. Copper fell 2.8 percent to $6,821 a ton in London, after losing 26 percent in the third quarter. Money managers cut combined net-long positions across 18 U.S. futures and options by 26 percent in the week to Sept. 27, data from the Commodity Futures Trading Commission show. That’s the largest reduction in almost three years. Corn fell 2.7 percent to $5.7675 a bushel and raw sugar declined 2.2 percent to 24.73 cents a pound. Gold for immediate delivery gained 2 percent to $1,655.70 an ounce and silver jumped 2.4 percent to $30.6425 an ounce. Gold dropped for the past four weeks as investors sold the metal to pay for losses in other markets. Money managers slashed net-long positions in U.S. gold futures and options by 19 percent in the week to Sept. 27, U.S. government data shows. “We expect physical demand to be quite decent in the coming days,” Edel Tully, an analyst at UBS AG in London, said in a report today. “After the recent washout, gold positioning is far from extended and this is quite a bullish signal for price strength ahead.” --With assistance from Glenys Sim and Chanyaporn Chanjaroen in Singapore and Lananh Nguyen in London. Editors: Claudia Carpenter, Rob Verdonck 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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