Virtual Metals Group

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COMMODITIES-Rally on economic hopes but with some pullback

CHICAGO, 13th August 2009 (Reuters)

Fresh signs of economic growth in European juggernauts Germany and France helped to rally commodities on Thursday but the gains were tempered by a likely bump on the United States' road to recovery.

Investors also cashed out profits in some of the markets that have posted strong gains in recent weeks as analysts cautioned that they could be overvalued.

Industrial metal copper futures surged to the highest level so far this year in the United States and to a 10-1/2 month high in London amid optimism over economic growth.

Oil rose past $71 a barrel before easing. London white sugar futures hit a record high while raw sugar slipped below Wednesday's 28-1/2 year high hit on tight global supplies. Grains tumbled as profit-taking wiped out early gains.

One day after the Federal Reserve said the U.S. economy was showing signs of stabilization after the deepest financial crisis in decades, data showed that Americans shopped less in July and more signed up for jobless benefits.

Copper rallied on support from the Federal Reserve's assessment of the U.S. economy, the world's largest.

"The general trend is up," said Carl Firman, an analyst with Virtual Metals. "There is an increased amount of data in the U.S. and elsewhere that has helped buoy prices across the entire base metal complex."

'GOOD NEWS IS VERY GOOD NEWS'

"Any good news is very good news and any poor news is discounted," Firman said, adding that any correction in metal prices was most likely to happen this quarter.

Germany and France, the two largest economies in Europe, posted surprise economic growth in the second quarter of 2009, ending their recessions earlier than many policymakers and economists had expected.

Benchmark copper on the London Metal Exchange soared to $6,450 a tonne, the highest since early October last year and more than double the levels seen in early April.

September copper at the New York Mercantile Exchange's COMEX division rose 9.05 cents, or 3.2 percent, to $2.9140 per lb.

Oil rose after better-than-expected quarterly earnings from U.S. retail giant Wal-Mart that reinforced hopes of an economic recovery but a lower stock market pared the gains.

"There's this global good feeling at the moment. It's reverberating through everything, commodity markets equally as well," said CMC Markets analyst James Hughes in London.

Oil finished up 36 cents at $70.52 per barrel after peaking at $72.21.

White sugar futures in London hit record highs while raw sugar in New York held near a 28-1/2 year highs hit on Wednesday amid tight global supplies and strong demand.

India, the world's largest sugar consumer, has swung to a net importer this year from net exporter in 2008 after a poor domestic harvest while a weak monsoon portends a disappointing crop in the 2009/10 season.

"Next year, we have 5 million tonnes (of sugar) that India needs to buy (on the world market)," Toby Cohen, head of research at London-based sugar merchant Czarnikow told Reuters television.

Liffe October refined sugar futures rose $7 to end at $577 per tonne after hitting a new all-time high of $589.90. ICE October raw sugar fell 0.76 cent to 22.21 cents per lb after a session high of 23.32 cents.

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  • September 26th - Europe's central banks seen queuing up to sell gold (Reuters)
  • THE YELLOW BOOK - Virtual Metals Research & Consulting and Fortis Bank in a new analysis of the global fundamentals and outlook for the international gold market.
  • Virtual Metals Research & Consulting announces today the launch of an innovative mechanism for the funding and development of sustainability projects in the minerals extraction industry. The new entity – called MineLife - is a collaboration between Virtual Metals, Barrick Gold Corporation, Gold Fields Limited, and Harmony Gold Mining Limited. It is dedicated to alleviating poverty and building long-term socio-economic development in Africa and, ultimately, in other developing markets.
  • Q2 05 The Hedge Book - Global hedging falls 2.5 Moz to 53.1 Moz
  • The latest edition of the Hedge Book, sponsored by Mitsui, shows dehedging quickened to 2.5 Moz in Q2 05, up from just 1.3 Moz in Q1 05. For the press release and full report click here

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