* 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 (Reuters) - 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.
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 European summer.
“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 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 2013 crop.
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.