Commodity Surge Boosts World Equities; Dollar Falls

 

Declines in the dollar, a bullish oil forecast and giant miner Glencore's pledge Friday to slash world zinc output by 4 percent have lifted beaten-down commodities, with Brent crude oil headed for its biggest weekly rise since March 2009.

 

The U.S. dollar hit a three-week low against the euro as minutes from the Federal Reserve's September policy meeting showed the Fed in no rush to raise interest rates.

 

The MSCI all-country world equity index climbed 0.6 percent, for its eighth daily gain. It was up 4.3 percent for the week, its biggest weekly advance since 2011.

 

The 19-commodity Thomson Reuters/Core Commodity CRB Index , a global benchmark for commodities, was up 4.8 percent on the week and was poised for its biggest gain since 2012.

 

"After a harsh selloff in commodities, followed up by the recent weakness for global equities over global growth concerns, we are now having a risk-on trade," said Chris Jarvis, commodities analyst at Caprock Risk Management in Frederick, Maryland, referring to investors' appetite for assets considered riskier, such as stocks and commodities.

 

Zinc jumped more than 11 percent, in its biggest daily gain in seven years, after the Glencore news. Glencore shares were on track for a gain of about 40 percent on the week, their biggest weekly rise since being floated in mid-2011, and doubling from a record low reached only two weeks ago.

 

U.S. stocks were modestly lower, as concerns over the outlook for earnings weighed on sentiment. Aluminum company Alcoa shares were down 5.4 percent following disappointing results.

 

The Dow Jones industrial average fell 19.44 points, or 0.11 percent, to 17,031.31, the S&P 500 lost 5.42 points, or 0.27 percent, to 2,008.01 and the Nasdaq Composite added 1.79 points, or 0.04 percent, to 4,812.58.

 

Still, for the week, the S&P 500 was on track for its best gain since December, with the S&P energy index up about 7.7 percent.

 

The FTSEuroFirst index of the leading 300 European shares closed up 0.4 percent.

 

In the foreign exchange market, the euro was last up 0.59 percent against the dollar at $1.12430, while a dollar index was down 0.6 percent.

 

The Fed minutes revealed the extent to which policymakers are concerned that a global economic slowdown might threaten the U.S. economic outlook. Though they said overseas turmoil had not "materially altered" economic prospects, they opted to hold interest rates steady last month.

 

An unexpectedly weak U.S. jobs report for September last week led many investors to speculate that the Fed will not deliver its first hike until 2016, a feeling strengthened by the contents of the minutes.

 

Brent crude oil futures were down 0.2 percent at $52.96 but on course for a rise of more than 10 percent on the week, which would be its biggest weekly gain since 2009.

 

U.S. crude was up 0.8 percent at $49.82 a barrel. Oil got a boost overnight after forecaster PIRA Energy Group predicted crude prices would rise to $70 per barrel by the end of 2016.

 

Three-month zinc futures were up 11.2 percent on the London Metal Exchange at $1,854 a tonne after Glencore said it will cut production by 500,000 tonnes, a third of its output and equivalent to 4 percent of the world's production.

 

Zinc had fallen 30 percent since May to a five-year low, so the rebound could mark the bottom of the market and the commodities complex in general, some analysts said.

 

Benchmark 10-year Treasuries notes were last little changed in price to yield 2.108 percent.