Commodities at 10-mnth low, see deepest drop since 2008

Global commodity prices fell to a 10-month low on speculation a Greek default would slow global growth and curb demand for raw materials.

The Standard & Poor’s GSCI Spot Index fell as much as 1.5 per cent to 582.39, the lowest since December 1, and was down 1.2 per cent at 8:51 am in London. The gauge tumbled 12 per cent in the three months to September 30, the most since the 44 per cent plunge in the final quarter of 2008. Copper fell as much as 5.5 per cent to $6,635 a tonne in London, the lowest since July 2010. Crude dropped as much as 2.3 per cent to $77.36 a barrel in New York.

European officials gather in Luxembourg on Monday to discuss the debt crisis and consider a further boost to a rescue fund. Greece yesterday approved austerity measures as part of efforts to secure an aid payment and a second rescue package. An index of US manufacturing for last month probably slowed, economists said before an industry report on Monday.

“There’s some uncertainty on the macro-economic side,” Natalie Robertson, an analyst at Australia & New Zealand Banking Group Ltd, said by phone from Melbourne.

The S&P GSCI Index has dropped 24 per cent since April, meeting the common definition of a bear market. The US and most of the euro region are already in recession, Nouriel Roubini, the economist who predicted the US housing bubble that started the last slump, told the Bloomberg Dealmakers Summit in New York on September 27.

CRUDE DROPS
Crude for November delivery fell 1.7 per cent to $77.73 a barrel on the New York Mercantile Exchange after closing last week at a one-year low. The fuel lost 17 per cent last quarter. Copper dropped 4.2 per cent to $6,725 a tonne on in London, after losing 26 per cent in the preceding three months.

Money managers cut combined net-long positions across 18 US futures and options by 26 per cent in the week to September 27, data from the Commodity Futures Trading Commission show. That’s the largest reduction in almost three years.

The US Institute for Supply Management’s factory index fell to 50.3 last month from 50.6 in August, according to a Bloomberg survey of economists ahead of the data’s release on Monday. A reading of 50 divides contraction from expansion. Spot gold gained 1.6 per cent to $1,649.20 an ounce and silver jumped 2.5 per cent to $30.69 an ounce.

“Gold is likely to be the beneficiary” of the European crisis, James Steel, an analyst at HSBC Securities USA Inc, wrote in a note. “Investors who may not have the patience to wait for a political solution to the debt crisis from policy makers may seek out gold as a portfolio diversifier.”