CORRECTED-COMMODITIES-Gold, grains lead market lower; ECB comments spook

Thu Feb 7, 2013 8:02pm EST

(Corrects 7th paragraph to say China GDP data was released last month, not on Wednesday)

* CRB index down for second straight session

* London's Brent rallies on fresh Iran concerns

* Grains, gold, natgas lead market lower

NEW YORK, Feb 7 (Reuters) - Commodities fell for a second session on Thursday, led by gold, grains and natgas markets, after European Central Bank (ECB) President Mario Draghi ignited renewed fears over the debt-laden euro zone, a major user of industrial raw materials.

London's Brent crude rallied amid fresh concerns over supplies from Iran.

Otherwise commodities fell in tandem with U.S. equities on recession worries after Draghi's comments triggered a nearly 1 percent drop in the euro against the dollar.

Draghi said that economic activity in the euro area should gradually recover later in 2013 but there are more negative risks than positive ones.

"Draghi's comments were neutral to modestly dovish, which means a rate cut is still on the table," said Ben Emons, senior vice president/global portfolio manager, at Newport Beach, California-based PIMCO, which had $2 trillion in assets as of Dec. 31.

Even so, there were signs that the economies of the United States and China, the world's two top commodity consumers, are recovering at a quicker pace than before.

The Chinese economy ended seven straight quarters of slowing growth with a 7.9-percent lift in the fourth quarter, data showed last month.

The number of Americans filing new claims for jobless benefits fell last week and put the four-week average reading at a near five-year low, but other data showed a productivity drop in the fourth quarter due to weak economic output.

The Thomson Reuters-Jefferies CRB index settled down 0.65 percent, falling for a second session and piercing its 20-day moving average.

OIL RALLY

Brent crude oil rose to a near five-month high above $117 a barrel after Iran rejected calls for direct talks with the United States, while U.S. crude prices fell amid pressure from growing domestic stockpiles in the Midwest.

Brent's premium over West Texas Intermediate (WTI) crude rose to more than $21 a barrel, the highest this year, after a report said a key refinery in the U.S. Midwest would remain shut for maintenance for longer than previously expected.

The delayed restart of a 260,000-barrel-per-day crude unit at BP's Whiting, Indiana, refinery will potentially add to the glut of oil at Cushing, Oklahoma, delivery point for the U.S. benchmark.

Brent finished 51 cents higher to settle at $117.24 a barrel, the highest close since mid-September.

U.S. crude dropped 79 cents to $95.83 a barrel. The Brent-WTI spread finished at $21.41 a barrel, the highest since mid-December.

"The Brent market is a little more sensitive to geopolitical risk and tensions, and reports that the leader in Iran said he doesn't want to engage in direct talks with the United States, that ratcheted up a bit of the geopolitical risk," said Gene McGillian, analyst at Tradition Energy in Stamford, Connecticut.

GOLD LOWER

Gold fell in a volatile session on fresh concerns about the health of the debt-laden euro zone following Draghi's comments.

Technical selling accelerated gold's losses after the metal failed to rise above its 55-day moving average, which gold has not closed above since late October.

"It was up earlier but couldn't get through a resistance level," said COMEX gold options floor trader Jonathan Jossen. "There is no interest in gold."

U.S. gold futures GCJ3 for April delivery settled down $7.50 at $1,671.30 an ounce, with trading volume in line with its 250-day average, preliminary Reuters data showed.

GRAINS WEAKEN

U.S. corn fell for a fifth straight session and hit a four-week low as Brazil's government forecast a record-large harvest this year, suggesting U.S. exports would face another year of stiff competition from the world's No. 2 supplier.

Soybean futures rebounded from earlier declines after the U.S. Department of Agriculture reported stronger-than-expected export sales last week, but struggled to hold those gains on forecasts for a massive South American harvest.

Wheat drifted lower with corn, falling for the fifth time in six sessions amid forecasts for more precipitation in the drought-stressed U.S. Plains wheat belt next week.

Trading volumes were modest as the market awaited Friday's monthly USDA supply-and-demand report.

"With our tight old-crop bean situation, there's concern that we could see some balance table tightening with higher crush and maybe export numbers. The corn is the other side with some fear that we might see lower exports," said Don Roose, president of U.S. Commodities. (Additional reporting by Gabriel Debenedetti, Frank Tang and Julie Haviv in New York, Karl Plume in Chicago; Editing by M.D. Golan and Paul Tait)

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