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COMMODITIES-Softer dollar boosts prices; arabica up most in 4 mths

Barani Krishnan
Monday, 6 Jan 2014 | 3:18 PM ET

NEW YORK, Jan 6 (Reuters) - Arabica coffee jumped more than 4 percent on Monday, rallying its most in four months on fund buying, while a weaker dollar helped boost prices of other crops and also oil and metals. The dollar slipped against the euro and yen after the release of weaker-than-expected U.S. services sector data, adding to the demand for dollar-denominated commodities from holders of other currencies. U.S. stock prices also fell, making alternatives like commodities more attractive to investors.

The Thomson Reuters/Core Commodity CRB index, a bellwether for commodities, rose 0.3 percent after gains in 11 of the 19 markets it tracks. Coffee futures rallied above long-term technical levels, driven by index fund rebalancing at the start of the year. March arabica coffee trading on ICE Futures U.S. surged 4.65 cents, or 4 percent, to settle at $1.21 per pound - the highest close for the spot contract since Aug. 15. It was also the market's sharpest one-day gain since Sept. 10. Adding to the technical rally in coffee was a report from Swiss-based commodities house ED&F Man, which said top coffee grower Brazil's 2014-15 crop was expected to fall well below earlier forecasts due to hard pruning and tired trees after two consecutive bumper harvests. "People will take notice of the report because the forecast numbers are well out of the range targeted so far," said Stefan Uhlenbrock, an analyst with F.O. Licht. In London-traded robusta coffee, the most-active second month contract settled up $61, or 3.7 percent, at $1,705 a tonne, also on fund buying. Brent crude oil edged higher in choppy trading after reports of restarted production at a Libyan oilfield, which hinted at more supply, were outweighed by doubts about its ability to reach markets. U.S. gold futures rose, shaking off an unusual and sudden tumble earlier in the session, as weakness on Wall Street extended bullion's rally to a third consecutive session. Copper steadied as the dollar fell but the metal's prices remained near a 2-week low on concerns about economic recovery in China, which accounts for about 40 percent of global copper demand. Prices at 3:01 p.m. EST (2001 GMT)

LAST/ NET PCT YTD CLOSE CHG CHG CHG US crude 93.63 -0.33 -0.4% 2.0% Brent crude 107.11 0.22 0.2% -3.6% Natural gas 4.306 0.002 0.0% 28.5% US gold 1238.00 -0.60 0.0% -26.1% Gold 1239.56 3.40 0.3% -26.0% US Copper 3.36 -0.02 -0.7% -8.0% LME Copper 7325.00 10.00 0.1% -7.6% Dollar 80.662 -0.129 -0.2% 5.1% CRB 277.104 0.574 0.2% -6.1% US corn 427.75 4.25 1.0% -38.7% US soybeans 1296.75 7.50 0.6% -8.6% US wheat 605.75 0.00 0.0% -22.1% US Coffee 121.00 4.65 4.0% -15.9% US Cocoa 2667.00 -32.00 -1.2% 19.3% US Sugar 16.08 0.00 0.0% -17.6% US silver 20.103 19.901 1.6% -33.5% US platinum 1413.70 2.20 0.0% -8.1% US palladium 738.50 7.30 1.0% 5.0%

(Editing by Chizu Nomiyama)