COMMODITIES-Oil, copper, grains rally as jobs data offer hope

Published: 26 Aug 2010 17:22:58 PST

* Drop in unemployment filings help view on economy

* Oil, copper, corn, coffee rally after claims improvement

* Bernanke speech set for Friday, keeps some on edge

* Due Fri: US Q2 GDP revision; Reuters/UMich sentiment-Aug

NEW YORK, Aug 26 - Many commodity prices rose on Thursday, repairing some of the week's heavy losses, after a surprise decline in U.S. jobless claims boosted crude oil over 1 percent, pushed copper and corn up nearly 3 percent, and lifted coffee 3.5 percent.

Gold, closed lower as investors unwound the safe-haven play that had lifted the precious metal sharply this week on several gloomy housing and manufacturing reports.

"Jobless claims data raised some hopes. There is reduced risk aversion and less concern about the economy, because we certainly had some dismal data earlier in the week," said Peter Buchanan, senior economist at CIBC World Markets in Toronto.

The RJ/CRB index of 19 commodities rallied to its highest level since Monday at 264.82. The global benchmark finished with a 0.86 percent gain at 264.04. (Graphic: http://link.reuters.com/kyv37m )

Oil advanced for a second day after improvement in U.S. jobs data eased some concerns about the economy's recovery.

Oil futures rallied 1.16 percent, finding strength from the labor market data showing first-time filings for jobless claims fell more than expected last week.

Copper climbed close to 3 percent after the improved weekly jobs data eased concerns about economic growth.

"The decline in claims numbers eased fears of a double dip recession. The economy is not out of the woods yet, but today's numbers indicated that the market was over-sold," said Peter Buchanan, commodities analyst at CIBC in Toronto.

Gold slipped on the jobs news, ending a two-day rise, denting bullion's case as a safe-haven investment. Silver pared early gains in tandem with gold. But because it also trades as an industrial metal it remained on course for a 6 percent rise this month. It would be silver's strongest monthly increase since April.

A slipping dollar also helped many dollar-denominated commodities, like oil and copper. The U.S. currency fell against both the euro and the yen as investors braced for a speech from Federal Chairman Ben Bernanke speech on Friday.

The annual Federal Reserve conference in Jackson Hole, Wyoming, where Bernanke will present his thoughts on the U.S. economy, has investors cautious. Any statement on continuing or increasing economic stimulus measures could dent the dollar, which could work to hike commodity prices, because of the currency differential. (For details, see )

The second release of second-quarter U.S. GDP will also keep market participants on watch. Many economists have downwardly revised their second-quarter estimates to a 1.4 percent growth pace from 2.4 percent reported last month after a slew of weaker-than-expected economic readings.

Agricultural commodities generally did will, with some funds buying commodities across the board.

Corn futures on the Chicago Board of Trade rose nearly 3 percent, their biggest one-day rally in nearly a month, on a mix of technical buying and prospects for strong demand.

Soybeans advanced and wheat also closed firm, but backed off the day's highs as traders booked profits.

The corn market got a boost from the U.S. Department of Agriculture's weekly U.S. export sales, which came in at more than 1.7 million tonnes, well above estimates.

"There is a lot of export business, and the big concern now is capacity. (U.S.) Gulf port load-out capacity is the tightest it's been in 20 to 25 years," said Paul Haugens, a vice president with Newedge USA in Chicago.

Arabica coffee futures rebounded from a one-month low in their biggest daily percentage gain in two months, following a sharp sell-off earlier in the week.