BLBG: Commodities Fall Most in 11 Weeks on European Debt Woes, ‘Macro Malaise’
Commodities fell, heading for the biggest drop in almost 11 weeks, as concerns intensified that European leaders will struggle to contain the region’s debt crisis, eroding prospects for energy, metal and crop demand.
The Standard & Poor’s GSCI index of 24 raw materials declined 3.8 percent to 623.8 at 11:21 a.m. New York time, led by metals. A close at that level would mark the biggest drop since Sept. 22. Gold futures fell as much as $97.40 to $1,565.70 an ounce, the lowest since Sept. 26.
German Chancellor Angela Merkel said there is no easy solution to the crisis after rejecting an increase in the upper limit of funding for the region’s permanent bailout mechanism. The euro fell below $1.30 for the first time since January. Yesterday, the Federal Reserve said that “strains in global financial markets continue to pose significant downside risks to the economic outlook.”
“The markets are sharply lower across the board as we are seeing more of the same ‘macro malaise’ at work,” Edward Meir, an analyst at INTL FCStone Inc. in New York, said in a report. “Most markets are taking their cue from the struggling euro.”
All of the GSCI components fell. Before today, the measure tumbled 15 percent from a 32-month high of 762.22 in April.
Silver futures slumped as much as 8.4 percent today. Copper declined 4.9 percent, the most since Oct. 20.
Crude oil fell the most since September month as the Organization of Petroleum Exporting Countries agreed to raise its production ceiling.
“OPEC agreed on a pretty decent hike in the ceiling, especially given the difficult economic realities in Europe,” said John Kilduff, a partner at Again Capital LLC, a New York- based hedge fund that focuses on energy. “The European debt crisis is nowhere close to resolved, so the euro is taking a hit.”
Oil futures for January delivery declined 4.5 percent to $95.67 a barrel on the New York Mercantile Exchange.
To contact the reporter on this story: Yi Tian in New York at ytian8@bloomberg.net
To contact the editor responsible for this story: Patrick McKiernan at pmckiernan@bloomberg.net
