Oil, Copper, Aluminum Jump on European Loan Plan; Rubber Gains

By Christian Schmollinger

May 10 (Bloomberg) -- Crude oil, copper, aluminum and rubber climbed on speculation a European loan package worth almost $1 trillion and a program of securities purchases will contain sovereign debt risks and bolster economic growth.

Oil soared 2.7 percent to $77.12 a barrel, the biggest intraday increase since April 29, copper surged 2.1 percent to $7,092 per metric ton and aluminum gained 3.3 percent to $2,140 a ton. Rubber increased 1.6 percent to 266.8 yen ($2.88) per kilogram. Gold dropped 0.7 percent to $1,200.40 an ounce.

Investors sought higher-yielding assets as governments of the 16 euro nations agreed to lend as much as 750 billion euros ($962 billion) to countries under attack from speculators. The European Central Bank will intervene in government securities markets, European Union Economic and Monetary Commissioner Olli Rehn said in Brussels. The Reuters/Jefferies CRB Index of 19 raw materials plunged 5.9 percent last week, the most since Dec. 5, 2008, on concerns the Greek debt crisis would spread.

“People have been selling risky assets for the past several weeks because of the Greek debts,” said Tetsu Emori, a commodity fund manager with Astmax Ltd. in Tokyo. “The people that were selling off are now buying back.”

The MSCI Asia Pacific Index of shares advanced 1.2 percent to 119.84 as of 2 p.m. in Tokyo, its first gain in six days. Standard & Poor’s 500 Index futures climbed 2.8 percent, the euro rose 1.3 percent to $1.2925 and the cost of protecting Asia-Pacific bonds from default fell the most in a year.

Oil Surges

Crude oil climbed from a 12-week low and June-delivery traded at $77.16 a barrel, up 2.7 percent, on the New York Mercantile Exchange at 1:05 p.m. in Singapore. Prices will likely return to $80 to $85 once the debt crisis in Greece is resolved, Algerian Energy Minister Chakib Khelil said yesterday.

The contract fell 2.6 percent to $75.11 a barrel on May 7, the lowest close since Feb. 12. Oil plunged 13 percent last week.

Three-month delivery copper on the London Metal Exchange traded at $7,085 a ton, up 2 percent. The metal’s finish of $6,945 a ton on May 7 was the lowest since Feb. 15. Zinc, nickel and lead also advanced.

Rubber rallied from its lowest price in almost five months. Futures for October delivery, the most-active contract, rose as much as 2.6 percent to 269.5 yen per kilogram. Gold fell as much as 1 percent to $1,196.10 an ounce, after climbing to $1,213.07 on May 7, the highest level since Dec. 3.

--With assistance from Li Xiaowei in Shanghai, Jae Hur in Tokyo, and Kyoungwha Kim in Singapore. Editor: James Poole.

(businessweek.com)