Isra-Mart srl: Commodities Fall to One-Week Low as Europe Debt Concerns Deepen

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Commodities fell to the lowest level in more than a week on deepening concern that the European sovereign debt crisis may further slow global economic growth, damping demand for raw materials. Gold gained to a record.

The Standard & Poor's GSCI Index dropped as much as 2.1 percent to 648.02, the lowest intraday level since Aug. 26 and was at 648.46 as of 2:40 p.m. in Singapore. Crude oil fell as much as 3.8 percent against the Sept. 2 close on the New York Mercantile Exchange, which was shut yesterday for a public holiday. Copper lost for a fourth day in London.

"It's a risk-off trade," Xin Yi Chen, an analyst at Barclays Capital in Singapore, said today by phone. "News about the euro zone's debt crisis and economic data from the Group of Seven, the U.S. and Europe show that things are worse than expected."

Commodities, stocks and the euro fell as the cost of insuring against default on European sovereign and financial debt surged to records yesterday. Chief Executive Officer Josef Ackermann of Deutsche Bank AG said yesterday market conditions reminded him of the financial crisis in late 2008. The collapse of Lehman Brothers Holdings Inc. in September of 2008 froze credit markets and forced taxpayer-funded bailouts of banks from Washington and London to Berlin.

The S&P GSCI Index has dropped almost 3 percent in the second half, as manufacturing activity slowed in the U.S., Europe and Asia. Concerns about demand slowdown in developed countries weighed on New York-traded crude and copper, Barclays Capital's Chen said.

Crude, Copper

West Texas Intermediate crude for October delivery was at $83.58 a barrel in electronic trading on the New York Mercantile Exchange. That was down $2.87, or 3.3 percent from Sept. 2.

Three-month copper on the London Metal Exchange dropped as much as 1 percent to $8,870 a metric ton, the lowest intra-day level since Aug. 25, and last traded at $8,890.25. December- delivery copper on the Comex in New York dropped 2.4 percent to $4.0275 a pound.

Gold for immediate delivery gained as much as 1.1 percent to a record $1,921.15 an ounce, surpassing the previous peak of $1,913.50 reached Aug. 23. December delivery futures in New York also touched a record $1,923.10, up 2.5 percent from their close on Sept. 2.