Bloomberg News

Commodities Rise Most in Four Weeks as Europe Moves on Bailout

November 29, 2011

Nov. 28 (Bloomberg) -- Commodities climbed the most in four weeks as European policy makers took steps to stem the region’s debt crisis, and U.S. retail sales surged.

The Standard & Poor’s GSCI index of 24 raw materials rose 1.4 percent to settle at 644.84 at 3:47 p.m. New York time, the biggest gain since Oct. 27. Nineteen commodities climbed, led by metals and energy. The gauge dropped 4.5 percent in the previous two weeks as rising borrowing costs deepened concern that Europe would fail to contain its fiscal turmoil.

Leaders drafted a framework for Europe’s bailout fund that they will discuss this week. U.S. retail sales at the start of the holiday season climbed 16 percent to a record. Commodities are beating equities for the fifth consecutive year. The GSCI index has climbed 2.1 percent in 2011, and the MSCI All-Country World Index of stocks has slumped 13 percent.

“It’s pretty simple,” said Jesper Dannesboe, a strategist at Societe Generale SA in London. The commodity market is “reflecting the view that there is a possibility that maybe European politicians will come up with promises that will allow the European Central Bank to come in and buy bonds more aggressively.”

Crude-oil futures in New York rose as much as 4.1 percent to $100.74, the highest since Nov. 17. The dollar fell as much as 1.2 percent against a basket of six major currencies.

“Commodities are popping from short-term oversold levels on dollar weakness and hopes that the quickly deteriorating situation in Europe will force policy makers to come in with a coordinated, sizable policy response,” Scott Gardner, the chief investment officer at Verdmont Capital SA in Panama, said in an e-mail.

Copper futures rose the most in a month in New York. Chilean workers at Collahuasi, the world’s third-largest source of the metal, began a strike today, stopping output at two main open pits and taking control of ore stockpiles.

Gold futures in New York rose 1.5 percent, the most in two weeks. Silver jumped 3.7 percent.

Corn, soybeans and wheat also climbed.

--With assistance from Ben Sharples in Melbourne. Editor: Patrick McKiernan

To contact the reporter on this story: Yi Tian in New York at ytian8@bloomberg.net; Robert Tuttle in Doha, Qatar, at rtuttle@bloomberg.net

To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net


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