Commodities surge on huge Wall Street rally
By STEVENSON JACOBS
AP Business Writer
NEW YORK — Commodities prices shot up Monday as U.S. and European governments intensified their efforts to revive the global banking sector — prodding investors to put some of their money back into financial markets.
Crude oil, copper, silver and agriculture commodities traded sharply higher, drawing momentum from a massive, record-breaking rally on Wall Street. The Dow Jones industrial average soared 936 points, the biggest one-day point gain ever and the biggest percentage gain since 1933.
Investors were calmer Monday after European leaders agreed overnight to a raft of new measures aimed at strengthening the battered financial sector, including debt guarantees, recapitalizing banks and new oversight measures. At the same time, U.S. Treasury Secretary Henry Paulson said his office would work quickly to implement a $700 billion bank rescue plan, including a new measure to buy equity in struggling banks, rather than just their soured mortgage-related assets.
Copper prices led the precious metals complex, with the December contract soaring 16.8 cents, or 7.8 percent, to settle at $2.3125 a pound on the New York Mercantile Exchange. December silver jumped 19 cents to settle at $10.79 an ounce.
Gold prices, however, pulled back as investors who bought the metal as safe-haven last week cashed in and jumped back into the stock market. Gold for December delivery fell $16.50 to settle at $842.50 an ounce on the Nymex.
John Reade, analyst with UBS in London, said persistent fears of "financial system Armageddon" will keep demand for gold strong in the near term but warned that prices will fluctuate wildly until stability returns to markets.
"This volatility will make it hard for investors attempting to profit from gold's upside to make money, although as a relic of last resort gold continues to attract significant buying from investors," Reade said in a note.
In energy markets, the recovery in the stock market boosted buying of crude futures. A weaker dollar also made oil more attractive as a hedge against inflation and weakness in the U.S. currency.
Light, sweet crude for November delivery rose $3.49 to settle at $81.19 a barrel on the Nymex, after earlier rising as high as $82.52.
The contract fell Friday $8.89 to $77.70, the lowest price since Sept. 10, 2007.
In other Nymex trading, heating oil futures rose 13.1 cents to settle at $2.341 a gallon, while gasoline future added 11.06 cents to settle at $1.9176 a gallon.
In agriculture trading, grain prices rose on the Chicago Board of Trade.
Wheat for December delivery rose 25 cents to settle at $5.885 a bushel, while December corn added 3.25 cents to settle at $4.115 a bushel.
November soybeans gained 18 cents to settle at $9.28 a bushel.
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