Oil, gold, copper gain with euro, stocks, data

NEW YORK Tue Aug 17, 2010 5:37pm EDT

NEW YORK (Reuters) - Oil rose on Tuesday, breaking a five-day decline, along with gold, which ran up to a 1-1/2-month high, and copper jumped nearly 2 percent as a weaker dollar, stronger equities and mixed, but positive, readings on the U.S. economy provided the lift.

Despite rising demand for U.S. supplies in the export market, wheat futures fell to a 2-1/2 week low, as investors decided to grab profits after the grain surged to two-year highs recently on worries over drought-stricken Black Sea region crops. <GRA/>

"We have a market that just is exhausting the buying interest right now," said Shawn McCambridge, grains analyst with Prudential Bache Commodities in Chicago. "Things that took us to our recent high have been pretty well digested and traded. Now the market is left trying to find something else."

Reflecting the firmer tone in metal and energy markets, the RJ/CRB index .CRB finished higher. The global benchmark, comprised of 19 commodities, gained 0.78 percent to 270.19.

Oil rose, snapping five-day's of losses, as expanding U.S. corporate earnings and a bigger-than-forecast rise in industrial production eased worries about the economy, and euro strength made dollar-denominated commodities cheaper for holders of other currencies. <O/R>

U.S. stocks were up as earnings from major retailers and a $39 billion takeover bid in the agriculture sector restored optimism about the profit outlook. .N

Growth prospects also improved with a jump in U.S. industrial production, which helped counter some recent signs of slowing economic growth.

Tuesday's mixed batch of data also showed a pick-up in producer inflation last month, which some analysts said helped to ease concerns of a damaging downward spiral of falling prices amid an ebbing economic recovery.

"The data doesn't suggest we are heading for a double-dip, the data does confirm that we are in a very subdued recovery. We continue to have a mixed picture with other sectors lagging and others leading," said Julia Coronado, an economist at BNP Paribas in New York.

U.S. gold futures rose to a 1-1/2 month high, gaining for a fourth straight session, as the dollar-denominated metal benefited from a stronger euro. <GOL/>

The euro rose against the dollar when solid Irish and Spanish bond auctions eased concerns about heavily indebted euro zone countries. <USD/>

Expectations of strong physical demand and the weaker dollar drove copper prices to a one-week high. With more than a 20 percent gain since the beginning of June, analysts said, prices of the industrial metal, used in power and construction, were pointing to a brighter economic outlook in the second half of the year. <MET/L>

"Copper is predicting a global recovery," said Michael K. Smith, president of T & K Futures and Options Inc in Port St. Lucie, Florida. "I think we are going to see the global growth picture improve by the end of the year."

Elsewhere, a day after rising to highs last seen in December 1997, benchmark arabica coffee futures ran out of steam when attempts to set fresh peaks failed. Instead, arabica made its biggest single-day loss in two weeks. Raw sugar reversed course and rallied to close 2.3 percent higher on a burst of short-covering. <SOF/L>

Prices at 3:03 p.m. EDT (1903 GMT)

(Reporting by Carole Vaporean;editing by Sofina Mirza-Reid)

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