COMMODITIES-Copper, gold lead rally on Fed hopes; oil sinks
* Gold, copper at multi-week highs in extended reaction to Fed
* Oil falls, breaking from initial rally, after bearish IEA
* Grains, coffee join broad run-up in commodities
(New throughout, updates prices, market activity to close of session in US copper, gold futures; adds price table) NEW YORK, July 11 (Reuters) - Copper and gold prices surged on Thursday on signs that the U.S. Federal Reserve may maintain economic stimulus longer than investors had expected, but oil fell after a forecast for high global supplies of crude. In crop markets, most grain prices rose on position-squaring ahead of Friday's monthly U.S. government crop report. Arabica coffee futures edged higher on speculative buying.
Copper hit its highest level in nearly a month and gold jumped to its highest in nearly three weeks as the dollar fell again against the euro and the yen, providing a further boost to commodities priced in the greenback. The 19-commodity Thomson Reuters-Jefferies CRB index hit a three-week high before retreating to show just a slight gain from Tuesday's close after the drop in U.S. crude oil, its main component. Copper's benchmark three-month futures contract closed up $175 at $7,000 a tonne on the London Metal Exchange. It peaked at $7,049.25 during the session, a high since June 18. U.S. gold futures for August delivery settled up 2.6 percent at $1,279.90 an ounce on New York's COMEX exchange. Ut had rallied as much as 4 percent earlier to a 2-1/2 week high of $1,297.20. The spot price of gold was up 1.3 percent at above $1,280 by 1:50 p.m. EDT (1750 GMT).
DOLLAR'S DROP BOOSTS COMMODITIES The dollar slid a day after the Fed released minutes from its June meeting, showing many policymakers wanted more signs of U.S. job market improvement before cutting the central bank's bond purchases. After the release of the minutes, Chairman Ben Bernanke said the Fed would continue an accommodative monetary policy given tame inflation and a fragile labor market. The minutes and Bernanke's remarks changed the view of many investors, who had expected the Fed to start paring from September its monthly commitment to buy $85 billion of bonds. Data from the U.S. Labor Department on Thursday showed the number of Americans filing new claims for unemployment benefits rose last week, a potentially worrisome sign despite continued recovery in the labor market. "We suspect that when the time comes in September, the Fed will indeed start to remove portions of its $85 billion/month purchase program, especially if the economy maintains its current growth trajectory," Edward Meir, a base metals analyst at INTL FCStone in New York, wrote in his daily commentary. "However, investors are not discounting such a scenario just yet, preferring to focus on the probability that the Fed will keep its program in place for far longer."
OIL BUCKS TREND Benchmark Brent crude oil out of Europe's North Sea was down 0.8 percent at below $108 a barrel, after rallying to $108.84 initially, its loftiest level since April 3. U.S. crude slid 1.7 percent to below $104.80 a barrel, after peaking at $107.45 earlier. The decline in oil prices followed a monthly supply-demand report from the International Energy Agency, which said the North American shale oil boom could spur the biggest rise in non-OPEC crude supply growth in decades next year. Such a surge would erode the market share of OPEC countries, the IEA said.
Prices at 1:49 p.m. EDT (1749 GMT)
LAST NET PCT YTD CHG CHG CHG US crude 104.83 -1.69 -1.6% 14.2% Brent crude 107.74 -0.77 -0.7% -3.0% Natural gas 3.611 -0.069 -1.9% 7.8% US gold 1279.30 31.90 2.6% -23.7% Gold 1280.46 16.82 1.3% -23.5% US Copper 3.18 0.08 2.7% -12.8% LME Copper 7001.75 176.75 2.6% -11.7% Dollar 83.053 -0.988 -1.2% 8.2% CRB 286.577 0.405 0.1% -2.9% US corn 719.50 9.75 1.4% 3.0% US soybeans 1593.00 1.25 0.1% 12.3% US wheat 684.00 12.00 1.8% -12.1% US Coffee 123.45 1.80 1.5% -14.2% US Cocoa 2234.00 56.00 2.6% -0.1% US Sugar 16.13 -0.12 -0.7% -17.3% US silver 19.960 0.008 4.2% -34.0% US platinum 1409.00 40.90 3.0% -8.4% US palladium 716.80 3.00 0.4% 1.9%
(Additional reporting by Manolo Serapio in Singapore; Editing