BlackRock says China, U.S. to power commodities markets

SYDNEY Mon Oct 29, 2012 9:17pm EDT

SYDNEY (Reuters) - BlackRock Inc (BLK.N), the world's largest money manager, downplayed the impact of Europe's financial woes on commodities markets on Tuesday, and said robust Chinese demand and an improving U.S. economy will support growth.

"The U.S. has been a big surprise to the upside, not of the order of Chinese GDP growth numbers... but it is much better than many people had expected at the beginning of the year," Catherine Raw, co-manager of BlackRock's BGF World Mining Fund told reporters on a media call on Tuesday.

"The euro zone crisis, at least for the moment seems less of a concern," Raw said.

BlackRock manages about $3.67 trillion of funds across equity, fixed income, cash management and other sectors, while its BGF fund manages $11 billion of mining stocks.

BGF's biggest holdings include Rio Tinto (RIO.AX) (RIO.L), which makes up 9.3 percent of the fund, and BHP Billiton (BHP.AX) (BLT.L), which makes up 8 percent, according to a September 30 entry on the company's website.

Raw said the outlook for copper was promising due to a general decline in the number of copper mines supplying global markets and a recovering housing market in the United States.

She said BlackRock was overweight in iron ore companies -- which include Rio Tinto and BHP Billiton -- and forecast a long-term price of around $120 a metric ton (1.1023 tons).

That is in line with a median estimate price forecast of $120 a metric ton, based on a Thomson Reuters poll of 12 analysts.[ID:nL3E8LT25H] and near the current spot price..IO62-CNI=SI

"The share prices today, we believe, are factoring in a pessimistic outlook, one in which commodity prices are going to average lower than what we see today," Raw said. "From our point of view, this creates a huge amount of value and a huge amount of opportunity."

BlackRock also manages Australia-listed fund Global Mining Investments GMI.AX, whose top three holdings are BHP, commodities trader Glencore (GLEN.L) and Rio Tinto.

GMI's portfolio underperformed its benchmark, the HSBC Global Mining Index, in the September quarter, returning 3 percent compared with a 6 percent rise in the benchmark.

Copper prices last week fell 2.4 percent in their largest weekly fall in four months, while a 15 percent rise in iron ore prices over the last month could be running out of steam as restocking of inventories comes to an end, according to some analysts.

But Raw said fortunes of mining companies could be turning up as long as China's economy continues to grow and a recovery in the U.S. takes hold.

(Editing by Richard Pullin)