Commodities were best performing asset in 2007 - study

LONDON (Reuters) - Commodities were the top performing asset class in 2007, outperforming residential property and equities, a study showed on Thursday.

Clerical Medical Assetwatch's biannual study, tracking the value of five asset classes over a ten-year period, said commodities provided a return of 20.6 percent in 2007.

Prices were boosted by strong demand from China and India, the study said, adding that soybeans were the strongest commodity -- rising 77.5 percent.

"Soyabeans were the strongest performing commodity...as farmers in the U.S. and elsewhere cut back production of the crop in order to grow more corn for the biofuels industry," the study said.

Base metal prices fell in 2007, with zinc being the worst performer by falling almost 45 percent, but precious metals provided investors with a return of 26.4 percent.

"Safe-haven flows into gold during the current financial market turmoil, along with increased demand for precious metals for both industrial uses and jewellery, have boosted prices," the study said.

The rally in gold and platinum continues in 2008, as platinum set consecutive record highs due to supply woes sparked by a power crisis in South Africa while gold set an all-time high in early February.

"Gold is viewed as a store of value and a hedge against financial market uncertainty and inflation, which has helped to boost its price to record levels," said chief economist Martin Ellis at Halifax Bank of Scotland (HBOS).

Clerical Medical is a part of HBOS.