NEW YORK: The selloff in commodities that began at the outset of the second quarter deepened on Wednesday as weak US jobs and services data dented recovery hopes in the world's No. 1 economy, sending oil, metals and crop prices tumbling along with stocks.
The dollar's fall against other major currencies, often a supporting influence, provided little relief for commodities denominated in the greenback. Even gold, which often reinforces its position as a safe-haven when the dollar or equities are down, hit a 9-month low.
Among key commodities, US crude oil headed for its sharpest one-day drop since November and copper touched an eight-month bottom as prices for both fell about 2 percent.
Wheat and arabica coffee were among the few commodities that bucked the trend, with wheat rising about 3 percent. But their relative strength came after being battered earlier in the week.
"It looks like correlations are all back to one with the stock market, although to be fair, commodities have never really de-coupled with equities for a long time now," said Sean McGillivray, vice president for asset allocation at Great Pacific Wealth Management in Grants Pass, Oregon.
The Thomson Reuters-Jefferies CRB index, a global indicator for commodities, fell 1 percent after 14 of the 19 markets it tracked slipped into negative territory. The index has fallen 2 percent in its three days so far in April, which started the second quarter.
The S&P 500 index for US stocks was also down about 1 percent on the day, although that was not far from a recent record high for the index.
Wednesday's slide across markets was triggered by an US jobs report that showed less-than-expected hiring in the private sector in March. An index measuring the country's services sector also came in below expectations.
Analysts said they expected markets to be on tenterhooks at least until Friday's release of the broader government payrolls report for March that would give a more fair assessment of the US jobs market.
"I think we have lots of relatively good signs for the US economy and that employment will not disappoint on Friday," said Camilla Sutton, chief currency strategist at Scotiabank in Toronto.
US crude oil fell 2.2 percent to hover below $95 a barrel after government data showed crude inventories at a 23-year high. Wednesday's weak data on jobs and services stoked more worries about energy demand in the No. 1 oil consuming nation.
"The report is somewhat bearish given the build in crude oil inventories and modest decline in gasoline inventories, which are the focus of the market," said John Kilduff, partner at Again Capital LLC in New York.
Gasoline sunk 3.5 percent to below $3 a gallon after data from the US Energy Information Administration showed stockpiles for gasoline fell a lot less than expected by the market last week.
London's Brent oil, the benchmark for global crude prices, was down 2.5 percent to below $108 a barrel.
Copper fell to an eight-month low as concerns about economic growth cast doubt on the global demand outlook for base metals. Speculators also geared toward short positions ahead of a two-day holiday in China, the world's biggest market for copper.
Benchmark copper on the London Metal Exchange closed at $7,386.5 a tonne, down from $7,465 at the close on Tuesday. Earlier, it hit $7,390, its lowest since early August.
LME aluminum fell to a seven-month low, lead skidded to a five-month low and nickel tumbled to its lowest in four months.
"Market sentiment has completely gone. It is with equities now, not with metals, and fundamentals are not improving," said Andrey Kryuchenkov, analyst at VTB Capital in Moscow.
"We are seeing more stocks going in than out at the moment ... On the macro front there are concerns about growth."
<Center><b><i>Copyright Reuters, 2013</b></i><br></center>
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