* Oil falls more than $1; copper, gold slip
* China manufacturing PMI hits 7-month low
* Corn jumps over 4 pct to 9-1/2-month top on drought
* Coming Up: U.S. ISM manufacturing PMI; 1400 GMT
By Manolo Serapio Jr
SINGAPORE, July 2 (Reuters) - Oil fell by more than a dollar and metals dropped on Monday as most commodities began the third quarter in the red, weighed down by weak Chinese manufacturing data and doubts over an EU deal that had fuelled the market’s biggest rally since 2009.
Corn defied the weakness, rising more than 4 percent at one point to a 9-1/2-month high, as a worsening U.S. drought put harvests in doubt, extending the rally in new-crop December corn after its record near-15 percent surge last week.
Supported by the corn price, wheat also jumped to levels unseen since last September, but other commodities gave back part of Friday’s steep gains after data showed China’s manufacturing activity hit a seven-month low in June.
The fall in most commodities prices underscored the fragility of markets which on Friday staged their biggest one-day gain since March 2009 - the Reuters Jefferies CRB index climbed 4.6 percent - after euro zone leaders said they would allow their rescue fund to inject aid directly into banks from next year, and moved to stabilise bond markets.
Brent crude fell $1.50 to $96.30 a barrel and U.S. oil also lost more than a dollar to $83.83 by 0502 GMT, after both posted their fourth largest daily gain on record on Friday.
Friday’s surge was “a rally driven by tentative hope and shaky expectations,” said Thomas Lam, chief economist at DMG & Partners Securities. “Given the expected timeline, the progress from the Europeans thus far is still too sluggish and unsteady,” he said.
Copper dropped 0.8 percent to $7,630.75 a tonne, after jumping more than 4 percent on Friday, its steepest since late November.
“The latest China PMI data has dampened sentiment, underlining how fragile the global economy is,” said Orient Futures derivatives director Andy Du, referring to a survey released on Monday that showed factory activity shrank in June at the fastest pace in seven months.
China is the world’s top copper consumer, and a Chinese slowdown has made it difficult for investors to push up copper strongly, even from prices which hit six-month lows last month.
Spot gold slipped 0.3 percent to $1,592.49 an ounce, tracking the euro’s losses.
The euro took a breather after its biggest single-day rally in eight months as investors searched for fresh leads to stretch Friday’s steep gains fuelled by the EU deal.
Bucking the trend, corn led U.S. grains higher, with the December contract on Chicago Board of Trade hitting a session peak of $6.64 a bushel, before trimming gains to $6.53-1/4, up 3 percent.
Extreme heat and dryness are hurting the U.S. corn crop at its crucial pollination phase, a situation weather forecasters expect to continue this week, with only small amounts of rain seen for drought-plagued Indiana and Ohio.
Chicago September wheat was up 1.1 percent at $7.65-1/4 a bushel, after touching a 9-1/2-month top of $7.74-3/4, tracking corn higher on prospects of higher volumes being channeled into animal rations, given the tight global supply of corn.
Soybeans, with harvests also threatened by the U.S. drought, rose 1 percent to $14.42-1/4.
Tokyo rubber futures rose as much as 5 percent in a belated response to the EU deal, but have since cut gains, to 245.5 yen per kg, up 2.2 percent. (Reporting by Manolo Serapio Jr.; Editing by Daniel Magnowski)