July 2, 2012 / 12:13 PM / 5 years ago

COMMODITIES-Oil, metals down on cautious Q3 start; grains surge

* Eurozone optimism fades on weak global manufacturing data

* Oil tumbles before closing off lows; copper down 1 pct

* Agricultural markets extend rally on crop concerns (Updates prices to close of U.S. session; changes byline, previous LONDON/SINGAPORE dateline)

By Barani Krishnan

NEW YORK, July 2 (Reuters) - Commodities began the third quarter on a mixed note on Monday, with energy and metals prices closing down on economic concerns while agricultural markets extended their rally on worries about U.S. crop weather.

Investors’ euphoria over last week’s euro zone debt deal faded as weak U.S., European and Chinese manufacturing data reinforced concerns about slowing economic growth and the threat to demand for industrial commodities such as oil, copper and aluminum.

Grains markets posted multi-month highs, reacting to the worsening drought in the U.S. Midwest crop belt.

The Thomson Reuters-Jefferies CRB index finished virtually flat after accounting for the different settlements among its 19 markets.

“After all the excitement on Friday, and the improvement in technicals, we are still rangebound and are still in the same broad range that we’ve been in since the beginning of May,” said Stanley Dash, a technical analyst at TradeStation who watches the gold market.

Gold was one of the markets that ended little changed as investors awaited clearer signals for the third quarter.

U.S. crude settled down 1.4 percent, or $1.21, at $83.75 a barrel, after falling as much as $2.86 earlier in the session. It had jumped more than 9 percent, or $7, in Friday’s session, helped by an EU deal to help Italy and Spain lower their borrowing costs.

Benchmark Brent crude out London finished down 46 cents at $97.34 a barrel, recovering from a low of $95.30. It rose more than $6 on Friday.

“Today’s selloff is a natural reaction after such enormous gains at the end of last week,” said Eugen Weinberg, Commerzbank’s global head of commodities research and a commentator on oil.

Copper fell almost 1 percent in New York and London trading. The economically sensitive metal was also pressured by a stronger dollar against the euro, which resulted in less demand for copper from users of the single currency.

Euphoria over last week’s EU summit deal faded, after the U.S. manufacturing sector unexpectedly contracted in June for the first time since July 2009 as new orders tumbled, according to an industry report released on Monday.

That came after business surveys on Monday showed manufacturing activity in the euro zone held at its lowest level since June 2009, with factories preparing for worse to come as jobs were cut at the fastest rate in two-and-a-half years.

A factory slump in China and Japan deepened as crumbling orders from abroad dragged activity to seven-month lows, heightening worries that the health of the global economy is deteriorating.

“Although last week’s EU Summit provided a brief glimmer of hope, triggering a sharp bout of end-quarter short covering, today’s PMI data has signaled a return to reality and reinforced evidence of a faltering global economic outlook,” said VTB Capital base metal analyst Wiktor Bielski.

Three-month copper on the London Metal Exchange closed at $7,625 per tonne, down from $7,690 at the close on Friday when the metal surged 4.1 percent, its largest single-day rise since Nov. 30.

In New York, the most-active September COMEX contract settled at $3.4690 per lb, down 0.8 percent or 2.75 cents from $3.4965 per lb on Friday.

Corn hit a 9-1/2 month peak as sweltering heat and scant rainfall punished the crop, extending last week’s 15 percent surge as forecasts of unrelenting heat and relatively little rain threatened to reduce the number of kernels that form on each cob during pollination, a critical stage of development.

New-crop December corn on the Chicago Board of Trade rose for the sixth time in seven sessions, adding 21 cents, or 3.3 percent, to $6.55-3/4 a bushel. It was the highest price for that contract since September.

Soybeans climbed to a four-year high on a continuous chart, supported by the stressful weather and confirmation that an unnamed buyer -- widely believed to be China -- had purchased nearly 1.2 million tonnes of soybeans from the United States, the fifth largest single-day U.S. soy export sale on record.

New-crop November CBOT soybeans rose 10-1/4 cents, or 0.7 percent, to $14.38 a bushel after setting a contract high of $14.55-3/4. The lightly traded front-month contract peaked at $15.42, the highest for a spot contract since July 2008. (Additional reporting by Eric Onstad in London and Manolo Serapio Jr in Singapore; Editing by Phil Berlowitz)

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