COMMODITIES-Most post losses on Cyprus worries, but gold rallies

Mon Mar 18, 2013 4:01pm EDT

* Fresh euro zone concern hits oil, metals and crops
    * Dollar at 3-month high vs euro further hurts commods
    * Brent crude, copper close off lows after 2 pct slide
    * Raw sugar down 3 pct, soybeans off 1 pct

 (Updates with settlement prices)
    By Barani Krishnan
    NEW YORK, March 18 (Reuters) - Commodities mostly fell on
Monday after an unusual bank bailout proposal for Cyprus
threatened fresh euro zone turmoil and pushed traders and
investors to dump oil, metals and crop futures and buy gold as a
hedge.
    The dollar rose to a more than three-month high against the
euro, diluting further the attractiveness of commodities
priced in dollars to holders of the single European currency.
 
    Oil and copper fell 2 percent in London trade before closing
off their lows. Raw sugar slumped more than 3 percent in
New York and soybeans more than 1 percent in Chicago.
  
    Gold rose nearly 1 percent, with some investors drawn to its
safe-haven reputation after Cyprus' 10 billion euro ($13
billion) bailout required the country's savers to pay up to 10
percent on deposits, shaking confidence in banks across the
continent. 
    The Thomson Reuters-Jefferies CRB index settled
down 0.7 percent after sliding almost 1 percent earlier.
Fourteen of the 19 commodities tracked by the CRB finished down.
    "The bailout conditions for Cyprus, specifically the
unprecedented removal of funds from depositors' accounts, are
sending share and commodity prices lower," said Tamas Varga, oil
analyst at oil brokers PVM Oil Associates in London. 
    "This step is causing shivers throughout the financial
world, and it has created the fear that a reaction in other
peripheral euro zone countries could hit the whole banking
sector in Europe," Varga added.
    
    OIL OFF SESSION LOWS BUT VULNERABLE 
    Brent crude settled at $109.51 a barrel, down 31
cents after sliding more than $2 during the session. U.S. oil
 closed up 29 cents at $93.74, having traded as low as
$91.76 earlier.
    "Oil prices are still vulnerable," Carsten Fritsch of
Commerzbank in Frankfurt said. "In the short term, the pressure
is likely to continue as further financial investors withdraw
from the market." 
    Oil markets will remain volatile for the next few days as
investors watch for any spillover from the developments in
Cyprus to other European Union countries, analysts said.
    In a radical departure from previous aid packages, euro zone
finance ministers want Cyprus savers to forfeit a portion of
their deposits in return for a bailout of the island,
financially crippled by its exposure to neighboring Greece.
Cypriot ministers were trying to revise a plan to seize money
from bank deposits before a parliamentary vote on Tuesday. 
 
    
    BIG DROP IN COPPER
    Copper sank to a four-month low. 
    The metal's benchmark three-month contract on the London
Metal Exchange fell to its lowest level since Nov. 9 at
$7,545.75 a tonne, but later pared losses to close at $7,576 a
tonne, down from Friday's last bid of $7,751.
    That left the contract down 2 percent on the day and 4
percent lower on the year. 
    Aside from the negative sentiment over Cyprus, copper was
also weighed down by rising stockpiles of the metal at
exchange-monitored warehouses.
    Warehouse stockpiles of LME copper rose 18,100 tonnes to
543,925 tonnes, their highest since February 2010. The copper
market is expected to record a surplus this year, after many
years of structural deficit - a factor likely to weigh on prices
in the second half especially. MCU-STOCKS
    
    GOLD NEAR 3-WEEK HIGH
    The Cyprus bailout reignited a safe-haven appeal in gold
that had tailed off dramatically over the past few months.
    "Whether that will last or not, it's still early to say ...
all the evidence we have now suggests gold shouldn't rally a lot
further from here," said Robin Bhar, analyst at Societe General
in London.
    By 3:30 p.m. EDT (1930 GMT), the spot price of bullion
 was up 0.8 percent at just below $1,605 an ounce after
setting a near three-week high above $1,610. 
    Gold prices are still down 4 percent on the year as
investors who became more confident of a U.S. economic recovery
moved toward equities and other risk assets that tend to yield
better in good times. 
    A rash of positive data out of China and increased stability
in the euro zone has also fueled speculation that central banks
could turn off the liquidity taps that had been flooding markets
in leading economies with cash. 
   ($1 = 0.7654 euros)
    
 Prices at 3:29 p.m. EST (1929 GMT)      
                             LAST/      NET    PCT     YTD
                             CLOSE      CHG    CHG     CHG
 US crude                    93.67     0.22   0.2%    2.0%
 Brent crude                109.33    -0.49  -0.5%   -1.6%
 Natural gas                 3.882    0.010   0.3%   15.8%
 
 US gold                   1604.60    12.00   0.8%   -4.2%
 Gold                      1604.54    12.70   0.8%   -4.2%
 US Copper                  341.70    -9.10  -2.6%   -6.4%
 LME Copper                7575.00  -177.00  -2.3%   -4.5%
 Dollar                     82.738    0.477   0.6%    7.8%
                             
 
 US corn                    720.00     3.00   0.4%    3.1%
 US soybeans               1409.50   -16.50  -1.2%   -0.7%
 US wheat                   712.75   -10.25  -1.4%   -8.4%
 
 US Coffee                  134.35    -3.15  -2.3%   -6.6%
 US Cocoa                  2088.00   -27.00  -1.3%   -6.6%
 US Sugar                    18.29    -0.60  -3.2%   -6.3%
 
 US silver                  28.874    0.023   0.1%   -4.5%
 US platinum               1579.20   -13.20  -0.8%    2.6%
 US palladium               764.85   -10.80  -1.4%    8.7%
 
 (Additional reporting by Getrude Chavez-Dreyfuss in New York,
Christopher Johnson, Maytaal Angel and Clara Denina in London,
and Melanie Burton in Singapore; Editing by Dale Hudson and Jim
Marshall)
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