Commodities Head for Biggest Weekly Decline in Over 50 Years (Glenys Sim)

Created by : Francis Goodwin View profile

(Bloomberg) -- Oil, copper, and corn drove commodities toward their biggest weekly decline in more than 50 years on concern that the worst financial crisis since the Great Depression will push the U.S. into recession.

Commodities, as measured by the Reuters/Jefferies CRB Index of 19 raw materials, have tumbled 9.9 percent this week, the most since at least 1956. Manufacturing declined to a 7-year low in the U.S. and contracted at the fastest pace in 16 years in the U.K. last month. Initial jobless claims rose to the highest since 2001, the U.S. Labor Department said yesterday.

``Panic, risk aversion and liquidation of contracts are characterizing the oil market as well as many other markets at the moment,'' said Thina Saltvedt, a Nordea Bank AB analyst in Oslo. ``Prices are not only being set by fundamentals, but fears of how crises in the financial sector may spread to other parts of the economy.''

Crude oil has lost 12 percent this week, the most since 2004. The contract for November delivery traded at $94.47 a barrel, up 0.5 percent, as of 12:11 p.m. London time.

The UBS Bloomberg CMCI Index of 26 raw materials is having its worst week since at least 1997 amid skepticism that a U.S. government $700 billion bank bailout plan won't be enough to stimulate economic growth and demand for commodities.