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Commodities surge on EU news

By Michael Bellart (Global Times)

08:07, July 02, 2012

Progress at last week's EU summit sent commodity futures skyrocketing late Friday, offsetting some of the losses in what still ended up a crushing quarter for the market.

West Texas Intermediate crude oil for August delivery leapt 9.3 percent Friday, 6.6 percent after the domestic markets closed, to end at $84.96 per barrel, up 6.5 percent for the week.

The benchmark three-month copper contract on the London Metal Exchange (LME) jumped 4.7 percent for the day to end at $7,738.00 per ton, a weekly gain of 5.4 percent.

Asian financial markets rallied Friday in response to the positive headlines out of Europe, according to the Australian bank ANZ.

Eurozone leaders agreed Friday to take steps to establish greater unity among the region's banks by allowing Europe's bailout funds to directly buy government debt, according to Reuters. The agreement, which Germany had opposed, is expected to help countries recapitalize their banks without increasing their budget deficits.

The yield on Spain's 10-year government bonds, which has served recently as a measure of eurozone anxiety, fell 61 basis points Friday to 6.32 percent.

Shakiness about the European banks has been weighing on the financial markets. Still, market watchers cautioned that the rally would probably be short-lived without further action from EU leaders.

Still almost all commodities surged Friday on news of the rescue plan, which overshadowed every other piece of market news.

Domestic base metals futures rose on Friday's news, but still had room to grow considering the much higher increases on international markets after the domestic markets closed.

The most traded copper contract on the Shanghai Futures Exchange (SHFE) added 1.92 percent Friday to close at 54,200 yuan ($8,528.72) per ton.

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