COMMODITIES-Prices tumble after talk of hedge fund in trouble
(Writes through with possible hedge fund liquidation and other details, quotes; adds NEW YORK to dateline, second byline)
* Rumor of commodity fund liquidation sparks broad selloff
* Gold at 6-month low, silver down most in 2 months
* Copper hits 1-month bottom
* Gasoline, US crude oil down more than 2 pct each
LONDON/NEW YORK, Feb 20 (Reuters) - Commodities tumbled on Wednesday after talk of a hedge fund in trouble and worries over global supply and demand prompted widespread selling in metals and oil. Jitters about minutes from a U.S. Federal Reserve meeting in January, due to be released later on Wednesday, added to the pressure. Gold slid to the lowest levels in six months, silver had its sharpest decline in two months and benchmark industrial metal copper fell to a one-month low. In oil, U.S. crude shed more than $2 a barrel. "There are rumours that a large commodity hedge fund blew up and was forced to dump its holdings, sparking a selloff across markets," said Adam Sarhan, chief executive at Sarhan Capital in New York, which invests in gold and other commodities. The stock market also slid, with U.S. energy stocks particularly falling on talk that that a troubled hedge fund was selling assets. "I heard the chatter about a hedge fund liquidating things today but how big, I don't know. Certainly it sparks concern," said Michael James, senior trader at Wedbush Morgan in Los Angeles The Thomson Reuters-Jefferies CRB index, a commodities bellwether, was on track to its sharpest loss in two months, sliding 0.7 percent by 12:30 p.m. EST (1730 GMT). Twelve of the 19 markets tracked by the CRB were down, with silver, gasoline and crude oil all falling more than 2 percent each. Reuters data showed the selloff accelerating between 10:00 and 11:00 a.m. as news of a fund in trouble gathered pace.
SOME MARKETS DOWN IN HEAVY VOLUME; SILVER LEADS Volume in silver was almost double the 30-day average. March , the most-active silver contract on New York's COMEX, slumped 2.8 percent for its sharpest decline since Dec. 20. Trading in London's Brent crude oil was nearly 30 percent above the 30-day norm. Brent fell below $116 a barrel, down $1.70, on prospects of more Saudi supply that offset confidence that there will be more demand from an improving global economy. U.S. crude CLc1 was at $94.65 a barrel, down $2.03. The spot price of gold fell to six-month lows, breaking through support at $1,600 an ounce, as investors were drawn to riskier assets. Copper's benchmark three-month contract in London slipped to their lowest in more than a month, dragged down by persistent demand concerns as post-holiday buying from top consumer China remained subdued. On the agricultural side, sugar raw prices near a 2-1/2 year low.
JANUARY RALLY HAVE GOTTEN AHEAD OF DEMAND Some analysts said an early rally in commodities this year on upbeat economic data from the United States and China may have got ahead of actual improvement in underlying demand. The CRB rose 4.3 percent during January. But it has eased back during most of February, and has shaved its yearly gain to only 0.5 percent. "We're entering the demand destruction price zone - when you start to have some fears about global demand," Olivier Jakob at Petromatrix said, referring to oil prices. "It's really a price level when you need to take into account the risk that demand could take a hit." A mixed reading of U.S. housing data added to concerns about whether recent improvements in economic figures would continue.
Prices at 12:58 p.m. EST (1758 GMT)
LAST NET PCT YTD CHG CHG CHG US crude 94.40 -2.26 -2.3% 2.8% Brent crude 115.66 -1.86 -1.6% 4.1% Natural gas 3.285 0.013 0.4% -2.0%US gold 1579.40 -24.80 -1.6% -5.8% Gold 1579.56 -24.65 -1.5% -5.7% US Copper 360.65 -4.30 -1.2% -1.3% LME Copper 7960.00 -90.00 -1.1% 0.4% Dollar 80.778 0.310 0.4% 5.2%US corn 697.00 1.75 0.3% -0.2% US soybeans 1484.00 13.75 0.9% 4.6% US wheat 737.00 4.75 0.7% -5.3%US Coffee 141.15 4.65 3.4% -1.8% US Cocoa 2099.00 -30.00 -1.4% -6.1% US Sugar 18.39 0.17 0.9% -5.7%US silver 28.620 -0.802 -2.7% -5.3% US platinum 1649.50 -48.00 -2.8% 7.2% US palladium 736.65 -27.50 -3.6% 4.7%
(Editing by Anthony Barker and Andrew Hay)