* Copper ends modestly lower ahead of two-day Fed meeting
* Oil down after initially rallying on Syria conflict
* Gold subdued by equities rally on Wall Street
* Natgas up as weather suggests more air-conditioning needs
By Barani Krishnan
NEW YORK, June 17 Copper closed a touch lower on
Monday on concerns the United States may scale back its monetary
stimulus program, and oil prices fell after initially rising on
fears of a superpower standoff over Syria and possible
disruptions to Middle East crude supplies.
Gold joined the slide as a rally in Wall Street
stocks pulled investors away from safe-haven assets.
Investors focused mostly on the U.S. Federal Reserve's
two-day meeting, beginning Tuesday, which they hoped would
provide clarity to the central bank's near-term policy on
The Fed's three quantitative easing programs, launched in
response to the financial crisis, have been responsible for many
of the price gains in gold and other commodities. The central
bank is under pressure to roll back some of the $85 billion in
monthly bond purchases under its latest program, after some
advances in the U.S. economy.
Data on Monday showed growth in New York state's
manufacturing sector picked up in June. Sentiment among U.S.
homebuilders, meanwhile, surged to the highest level in seven
years, pushing the dollar higher and hurting commodities
denominated in the currency.
In crop markets, cocoa prices sank for their sharpest
three-session drop in more than a year. But corn ended
up, gaining 2 percent on tight inventories.
Natural gas also bucked the broadly lower trend in
the commodities complex, rallying almost 4 percent as hotter
weather forecasts in the U.S. Northeast and Midwest implied more
demand for gas-driven power to fuel air conditioning.
The gains on those few commodities helped the 19-commodity
Thomson Reuters-Jefferies CRB index finish flat on the
FOCUS ON FED
Analysts said they expected thin, nervous trading across the
markets until Wednesday's policy statement by the Fed. Fed
Chairman Ben Bernanke, in recent congressional testimony,
alluded to the "next few meetings" as being the time when the
Fed might act if it were to make changes to its monetary easing
"It remains to be seen how the various markets are going to
react to the policy statement and Bernanke's news conference.
There is a good chance that neither one will get the balance
right with respect to investor expectations," said Edward Meir,
base metals analyst at INTL FC Stone.
LARGER SUPPLY ALSO WEIGHS ON COPPER
Copper's benchmark three-month futures contract on the
London Metal Exchange closed at $7,082 a tonne versus
Copper initially rose as much as 1 percent before data
showing a jump of more than 11,000 tonnes in LME-linked
warehouse supplies weighed on the market.
News that India's top copper smelter had reopened on Sunday,
after complaints from residents had forced a two-month shutdown,
helped underpin the price drop.
OIL MARKETS WATCH SYRIA
Oil's benchmark Brent crude out of Europe's North
Sea closed down 46 cents at $105.47 a barrel.
New York-traded U.S. crude finished down 8 cents at
Aside from the Fed, investors in oil will be watching
developments this week in Syria, including Monday's talks
between U.S. President Barack Obama and Russia's Vladimir Putin
that were aimed at ending a two-year civil war in that country.
Putin said he and Obama had differences in opinion over Syria
but that both of them wanted the violence there to end.
Syria is not key to global oil supply, but investors are
worried the civil war there could drag into other nations and
plunge the whole Middle East region into conflict.
Prices at 4:02 p.m. EDT (2002 GMT)
LAST/ NET PCT YTD
CLOSE CHG CHG CHG
US crude 97.83 -0.02 0.0% 6.5%
Brent crude 105.58 -0.35 -0.3% -5.0%
Natural gas 3.875 0.142 3.8% 15.6%
US gold 1383.10 -4.50 -0.3% -17.5%
Gold 1384.01 -6.19 -0.4% -17.3%
US Copper 3.20 0.00 -0.1% -12.5%
LME Copper 7083.00 -7.00 -0.1% -10.7%
Dollar 80.567 -0.103 -0.1% 4.9%
CRB 286.259 0.083 0.0% -3.0%
US corn 668.50 13.50 2.1% -4.3%
US soybeans 1512.50 -4.00 -0.3% 6.6%
US wheat 680.50 -0.25 0.0% -12.5%
US Coffee 122.35 0.10 0.1% -14.9%
US Cocoa 2221.00 -25.00 -1.1% -0.7%
US Sugar 16.93 0.15 0.9% -13.2%
US silver 21.758 21.538 1.5% -28.0%
US platinum 1434.80 -12.60 0.0% -6.8%
US palladium 716.30 -13.50 -1.8% 1.8%
(Editing by Jim Marshall)