June 20 (Bloomberg) -- Commodities declined to the lowest level in six weeks led by losses in crude oil and copper after European governments failed to agree on a loan payment to spare Greece from default, increasing concern over economic growth.
The Standard & Poor’s GSCI Index of 24 raw materials dropped as much as 1.2 percent to 661.35 and was at 663.64 at 1:10 p.m. in London. The gauge slumped 4.7 percent last week, the first loss since the period ended May 6.
Euro-area finance ministers put off a decision on whether Greece will get the full 12 billion euros ($17.1 billion) promised for July as part of last year’s bailout package, sending the euro lower against the dollar for the first time in three days. The International Monetary Fund cut its 2011 forecast for U.S. growth for the second time in two months.
“The major influence continues to be the European situation,” Ben Westmore, a minerals and energy economist at National Australia Bank Ltd. in Melbourne, said by phone today. “If you look at what happened to the oil price during the financial crisis you can see that these events have a big impact. There is this tone of a global slowing in the economy.”
Investors have reduced holdings of commodities and equities in favor of cash and bonds because of the worsening debt crisis in Europe and on concern that the global economy may expand more slowly than expected, according to the June survey by Bank of America Merrill Lynch.
Funds Cut Bets
Money managers cut their net-long positions in 18 U.S. commodities by 0.9 percent to 1.3 million futures and options contracts in the week ended June 14, government data compiled by Bloomberg show. That’s the first drop since May 17. Declines were led by a 63 percent plunge in bets on rising wheat prices. Natural gas holdings tumbled 41 percent.
The U.S. economy will grow 2.5 percent this year, down from 2.8 percent projected in April, the IMF said June 17, citing higher commodity prices, bad weather and a weak housing market. The world economy will expand 4.3 percent this year, down from 4.4 percent estimated two months ago, the Washington-based IMF said. It left its 4.5 percent forecast for next year unchanged.
Crude oil for July delivery fell as much as 2 percent to $91.14 a barrel on the New York Mercantile Exchange and last traded at $91.40. Oil may drop this week on signs that economic growth will slow in the U.S. and China, curbing fuel use in the biggest crude-consuming countries, a Bloomberg News survey showed. Eighteen of 38 analysts, or 47 percent, forecast prices will decline through June 24.
In China, the largest user of grains, metals and energy, the Shanghai Composite Index fell as much as 1.2 percent to the lowest level since September 2010. China will raise interest rates in the next 10 days, said Nomura Holdings Inc. The People’s Bank of China increased lending rates four times since September to tame inflation.
The U.S. Dollar Index, which measures the greenback against six major currencies, advanced as much as 0.6 percent. Copper for delivery in three months declined 1.5 percent to $8,963 a metric ton, taking this year’s decline to 6.6 percent. Gold for immediate delivery fell 0.3 percent to $1,534.70 an ounce after gaining 0.5 percent last week.
-- With assistance from Glenys Sim in Singapore and Ben Sharples in Melbourne. Editors: James Poole, John Deane
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