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COMMODITIES-Metals, oil slammed by more euro zone fears
May 30, 2012 / 3:12 PM / in 5 years

COMMODITIES-Metals, oil slammed by more euro zone fears

* Copper, platinum fall to 4-1/2 month lows

* Brent crude off 2.5 pct below $104/barrel

* Gold falls 1.5 pct as euro hits 23-month low

By Eric Onstad

LONDON, May 30 (Reuters) - Commodities slid on Wednesday on heightened fears about the European debt crisis, including about Spanish banks, Italian borrowing costs and upcoming Greek elections.

Both copper and platinum spiralled down to 4-1/2 month lows while oil and gold also were also hit as investors sold off risky assets including equities.

Also weighing on commodities was a buoyant dollar extending gains against the euro, which hit 23-month lows, as investors fled to the U.S. currency and treasuries as a safe haven.

Markets extended losses on worries that Spain’s banking problems would push its borrowing costs to unsustainable levels and after a new poll showed Greece’s radical leftist SYRIZA party, which wants to ditch austerity, may win an election next month.

“As we’ve seen during other periods of extreme risk aversion, investors go into Treasury bonds, which are yielding record lows, or they stay in cash. It’s preservation of capital,” said analyst Robin Bhar at Societe Generale in London.

The Thomson Reuters-Jefferies CRB index, a global benchmark for commodities fell 1.4 percent to the lowest levels in more than 20 months.

Brent crude oil, which slid 2.5 percent to under $104 per barrel, also got hit after China signalled it was not planning a large stimulus package, dimming demand prospects.

“The European debt crisis and concerns about Chinese economic growth together mean that sentiment is on the very bearish side,” said Andy Sommer at EGL in Dietikon, Switzerland.

Industrial bellwether copper shed more than 2 percent to edge below $7,500 per tonne, the weakest since early January.

Gold prices fell 1.5 percent, the second day of losses, testing support near $1,530 an ounce.

Gold prices has fallen by more than 7 percent in May, marking its worst monthly performance since December, when it fell by nearly 11 percent.

In agricultural markets, U.S. grains fell sharply, with wheat dropping more than 1 percent to a two-week low.

Corn and wheat futures declined despite a larger-than-expected downgrade in U.S. crop conditions, while soybeans tumbled to their lowest in a week.

Arabica coffee futures touched a fresh 21-month low, weighed down by expectations of a big crop in Brazil, while robusta coffee consolidated near an 8-1/2-month high.

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