* U.S. jobs, services data dent recovery hopes
* Commodities follow stocks; little relief from weak dollar
* CRB index drops 1 pct on day, 2 pct so far in second
* US crude oil falls below $95, biggest drop since November
* Copper at 8-month low, gold at 9-month bottom
(Adds settlement prices)
By Barani Krishnan
NEW YORK, April 3 The commodities selloff that
began at the outset of the second quarter deepened on Wednesday
as weak U.S. jobs and services data dented recovery hopes in the
world's No. 1 economy, sending oil, metals and crop prices
tumbling with stocks.
The dollar's fall against other major currencies,
often a supporting influence, provided little relief for
commodities denominated in the greenback. Even gold,
which typically reinforces its position as a safe-haven when the
dollar or equities are down, hit a 9-month low.
Among key commodities, U.S. crude oil fell nearly 3
percent, its sharpest one-day drop since November. Copper
lost about 1 percent, after touching an eight-month low.
Wheat and arabica coffee were among the few
commodities that bucked the trend, with wheat up nearly 4
percent and arabica 2 percent. But their relative strength came
after being battered earlier in the week.
"It looks like correlations are all back to one with the
stock market, although to be fair, commodities have never really
decoupled with equities for a long time now," said Sean
McGillivray, vice president for asset allocation at Great
Pacific Wealth Management in Grants Pass, Oregon.
The Thomson Reuters-Jefferies CRB index, a global
indicator for commodities, fell 1.3 percent after 13 of the 19
markets it tracked slipped into negative territory. The index
has fallen 2.2 percent in the first three days of April, the
start of the second quarter.
The S&P 500 index for U.S. stocks was down about 1
percent on the day, although that was not far from a recent
record high for the index.
Wednesday's slide across markets was triggered by a U.S.
jobs report that showed less-than-expected hiring in the private
sector in March. An index measuring the country's services
sector also came in below expectations.
Analysts said they expected markets to be on tenterhooks at
least until Friday's release of the broader government payrolls
report for March that would give a fairer assessment of the U.S.
"I think we have lots of relatively good signs for the U.S.
economy and that employment will not disappoint on Friday," said
Camilla Sutton, chief currency strategist at Scotiabank in
U.S. crude oil settled down 2.8 percent at $94.45 a barrel
after government data showed crude inventories at a 23-year
high. Wednesday's weak data on jobs and services stoked more
worries about energy demand in the No. 1 oil consuming nation.
"The report is somewhat bearish given the build in crude oil
inventories and modest decline in gasoline inventories, which
are the focus of the market," said John Kilduff, partner at
Again Capital LLC in New York.
Gasoline sank 4.2 percent to close at $2.9140 a
gallon after data from the U.S. Energy Information
Administration showed stockpiles for gasoline fell a lot less
than expected by the market last week.
London's Brent oil, the benchmark for global crude
prices, settled down 3.2 percent at $107.11 a barrel.
Traders said oil prices were also pressured by news that
Iran must respond to an offer proposed by world powers if this
week's nuclear talks in Kazakhstan were to succeed.
Copper fell to an eight-month low as concerns about economic
growth cast doubt on the global demand outlook for base metals.
Speculators also geared toward short positions ahead of a
two-day holiday in China, the world's biggest market for copper.
Benchmark copper on the London Metal Exchange closed at
$7,386.5 a tonne, down from $7,465 on Tuesday. Earlier, it hit
$7,375, its lowest since Aug. 16.
LME aluminum fell to a seven-month low, lead
skidded to a five-month low and nickel tumbled to its
lowest in four months.
"Market sentiment has completely gone. It is with equities
now, not with metals, and fundamentals are not improving," said
Andrey Kryuchenkov, analyst at VTB Capital in Moscow.
"We are seeing more stocks going in than out at the moment"
he said, referring to copper stockpiled at LME warehouses. "On
the macro front there are concerns about growth."
Prices at 3:24 p.m. EDT (1924 GMT)
LAST/ NET PCT YTD
CLOSE CHG CHG CHG
US crude 94.37 -2.82 -2.9% 2.8%
Brent crude 107.19 -3.50 -3.2% -3.5%
Natural gas 3.900 -0.069 -1.7% 16.4%
US gold 1552.80 -22.30 -1.4% -7.3%
Gold 1556.75 -18.49 -1.2% -7.0%
US Copper 333.30 -4.55 -1.3% -8.7%
LME Copper 7388.00 -77.00 -1.0% -6.8%
Dollar 82.711 -0.219 -0.3% 7.7%
US corn 641.50 1.00 0.2% -8.1%
US soybeans 1380.25 -13.75 -1.0% -2.7%
US wheat 696.50 25.75 3.8% -10.5%
US Coffee 139.45 3.30 2.4% -3.0%
US Cocoa 2150.00 -21.00 -1.0% -3.8%
US Sugar 17.50 -0.09 -0.5% -10.3%
US silver 26.797 -0.451 -1.7% -11.3%
US platinum 1539.80 -32.00 -2.0% 0.1%
US palladium 755.45 -13.95 -1.8% 7.4%
(Editing by Bob Burgdorfer and Phil Berlowitz)