ALI: COMMODITIES-CRB at 1-month high as oil, copper and wheat rally
NEW YORK, July 22 - Oil and copper prices rose 3 percent each on Thursday, driving a key commodities index to a one-month high, on a weak dollar, positive economic data on both sides of the Atlantic and other encouraging fundamentals.
The Reuters-Jefferies CRB index rose 1.7 percent to its highest level since June 21 as the run-up in energy and metals was joined by 13-month highs in wheat due to harvest worries in Russia.
The 19-commodity CRB, largely weighted by oil, has registered its best performance in July since February, rising more than 2.5 percent. stock indexes, such as the Dow Jones Industrial Average and the S&P 500, rose about 2 percent each on strong quarterly corporate earnings and a less-than-expected drop in sales of existing U.S. homes in June.
Financial markets were on the edge just a day earlier after U.S. Federal Reserve Chairman Ben Bernanke said the world's largest economy faced "unusually uncertain" prospects and further easing measures may be needed to boost growth.
Thursday's home sales data assured investors that things were better.
"Home sales data was great," said Burt White, managing director and chief investment officer at LPL Financial in Boston. "On an absolute basis, it's (bad), but, man, it is in the right direction and certainly crunched consensus, and that is great news."
'NO DOUBLE DIP' - REUTERS INSIDER
Sebastian Wanke, an analyst at Germany's Dekabank, concurred with that view.
"I think that this is a very good sign that we are not heading for a double-dip (U.S.) recession," Wanke said in an interview with Reuters Insider.
The U.S. home sales numbers coincided with data showing the fastest pace of growth in almost three years in the services sector of Germany, Europe's biggest economy. The German manufacturing sector also expanded at a pace not far off April's 14-year survey highs.
The euro rose more than 1 percent against the dollar. The weaker dollar whetted investors' risk appetite for commodities as raw materials denominated in the U.S. currency became cheaper for users of the euro and other currencies.
Analysts said further direction for copper and oil could come from Monday's data on U.S. new home sales in June.
Oil prices hit 3-1/2-week highs as news of bad weather potentially disrupting crude production in the Gulf of Mexico added fuel to the positive sentiment provided by the weak dollar.
U.S. crude oil's benchmark front-month September contract surged as much as 3.1 percent, or $2.39, to a session peak of $78.95 a barrel.
Copper prices neared 2-1/2-month highs. The metal, used in construction and power generation, reached a session peak of 7,050 a tonne in London, its highest since May 14. It had closed at $6,850 a tonne on Wednesday.
In New York, U.S. copper futures' most actively traded September contract jumped 3.2 percent, or 9.95 cents, to $3.1925 a lb.
Front-month U.S. wheat futures broke above $6.00 a bushel for the first time in 13 months as a spreading drought reduced crop prospects in Russia, a key exporting nation.
Wheat for September delivery in Chicago peaked at $6.10 per bushel, up 3.7 percent and marking the highest level for a continuous front-month contract since June 2009.
