* Crude oil down about 3 pct, sharpest dip in 2 weeks
* Copper down first time in 5 sessions
* Arabica coffee, raw sugar join slide after recent strength
* Gold stays near 11-month highs on safe-haven demand
By Barani Krishnan
NEW YORK, Oct 3 Oil prices fell the most in two
weeks on Monday and agricultural markets took another pounding
as European economic data pointed to a recession, which could
hurt global demand for commodities.
Even raw materials like copper, arabica coffee and raw sugar
-- which rose in the past two sessions -- joined the sell-off.
Gold retained its robust fourth quarter start, staying near
this week's 11-month high as more investors turned to the
precious metal, which usually becomes a haven in times of
economic and political trouble.
"Gold has certainly got a bit of spring in its step at the
end of the summer break," said Ross Norman, chief executive at
gold-broking firm Sharps Pixley. "There is good physical buying
coming through and central bank buying is firm so the market
will support it."
The 19-commodity Thomson Reuters-Jefferies CRB index
was down 1.5 percent by 11:40 a.m. EDT, its sharpest percentage
decline since Sept. 18. Aside from gold, only four other
markets tracked by the CRB rose, with nickel leading
gains after a 1.3 percent rise.
OIL DOWN FOR 3RD DAY
Crude oil fell about 3 percent in both the London and New
York markets as economic data from Europe and China dimmed the
outlook for fuel demand and added to concerns arising from
Europe's festering debt crisis.
Dwindling new orders and faster layoffs marked a worsening
decline for euro zone companies last month, according to
business surveys that dented hopes the economy will return to
growth before 2013.
Purchasing managers indexes (PMIs) for the euro zone
released on Wednesday suggested it was almost inevitable that
the region had returned to recession in the third quarter.
Highlighting the impact on oil consumption, retail sales in
the euro zone barely rose in August as motorists cut back
spending on fuel during the normally busy driving months of the
"There's little to be cheerful about," said Filip Petersson,
analyst at SEB in Stockholm.
China's official PMI for the services sector also fell in
September from August as growth in the manufacturing industry
stabilized at a slower pace.
Benchmark Brent crude in London traded at just below
$109, down 2.5 percent on the day. U.S. crude hovered
under $89, down 3.2 percent.
Despite their tumble for a third straight day, oil prices
are still more than $20 a barrel higher than they were in June
amid worries supplies could be trimmed should a conflict develop
in the Middle East.
Investors were closely watching developments in Iran where
riot police clashed with demonstrators and currency exchange
dealers in the capital Tehran over the collapse of the rial,
which has lost a third of its value against the dollar in a
week, witnesses said.
Markets were also keeping a nervous eye on Iran's relations
with the West and Israel as Tehran kept up with its
controversial nuclear program.
"The situation between Iran and Israel will keep the heat
under the (oil) market until the end of the year," Tony Nunan,
oil risk manager at Mitsubishi Corp in Tokyo, said.
COPPER SNAPS 4-DAY RUN-UP
Copper ended a four-day winning streak although losses in
the key industrial metal were limited by better-than-expected
private sector job additions in the United States in September.
Investor focus is now on the all-important U.S. nonfarm payrolls
data due on Friday.
Copper has risen 9 percent since the start of September to
touch a 4-1/2 month peak of $8,422 a tonne on the London Metal
Exchange. The rally was fueled by promises of bond-buying by the
U.S. Federal Reserve and European Central Bank and other
stimulus measures in China and Japan.
In Wednesday's session, LME's three-month copper
settled down nearly 1 percent at $8,260 a tonne.
Soybean futures traded in Chicago dropped for a third
day in a row and hit a three-month low as a rapidly progressing
U.S. harvest revealed larger-than-expected yields and as
beneficial rains in South America bolstered hopes for a large
Corn futures followed soybeans lower, with additional
pressure from a slowdown in ethanol production and sharply lower
crude oil prices. Wheat, like soybeans, fell for a third
day and also the seventh time in eight sessions.