Oct. 6 (Bloomberg) -- Cocoa futures rose, capping the longest rally since late August, on speculation that Europe will control the region’s debt crisis, preserving economic growth to fuel demand for commodities.
The European Central Bank may protect banks from the fallout of a potential Greek default, ECB President Jean-Claude Trichet said today. The Standard & Poor’s GSCI gauge of 24 raw materials rose for the second straight day after touching a 10- month low on Oct. 4. Cocoa tumbled 16 percent last month.
“If you get any kind of stabilization in global markets, you’re going to see demand improve for basic commodities, including cocoa,” Phil Streible, a senior market strategist at MF Global Holdings Ltd. in Chicago, said in a telephone interview.
Cocoa futures for December delivery rose $38, or 1.4 percent, to settle at $2,660 a metric ton at 12:02 p.m. on ICE Futures U.S. in New York, the biggest gain for a most-active contract since Sept. 27 and the third straight increase. The commodity has slumped 30 percent from a 32-year high of $3,775 on March 4.
The MSCI World Index of equities rose as much as 2.5 percent, and the dollar declined against a basket of major currencies, increasing the investment appeal of commodities.
Cocoa’s rally was tied more to financial markets than any “fundamental strength,” Spencer Patton, the chief investment officer at Steel Vine Investments in Chicago, said in a phone interview.
--Editors: Patrick McKiernan, Steve Stroth
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