Commodities fell for a second day, led by industrial metals and agriculture, on speculation U.S. and European economies still need assistance after the worst global recession since World War II. The Standard & Poor’s GSCI Total Return Index of 24 commodities fell 1.1 percent by 12:41 p.m. in London, after dropping 1.7 percent yesterday. All of the six main metals on the London Metal Exchange slid on speculation steps to control inflation in China will curb demand for raw materials. Robusta coffee fell the most in three months, while oil extended its biggest drop in seven weeks. Federal Reserve policy makers signaled yesterday they aren’t ready to scale back purchases of $600 billion in bonds. Risks of more turmoil in sovereign debt markets still “clouded” the outlook for global recovery, John Lipsky, the International Monetary Fund’s first deputy managing said on the fund’s website. Commodities climbed to a two-year high this week on signs of shortages for some materials such as copper and wheat. “Big macro factors such as Europe’s debt and inflation in China are affecting commodities demand in the short term,” said Connor Noonan, an analyst at Castlestone Management Ltd. in London. “But at the end of the day, if we’re having continued tight supplies, a bad bond auction in Portugal will not rectify that situation.” Copper for delivery in three months slid as much as 2.2 percent on the LME and was last down 1.7 percent at $9,415 a metric ton. It reached a record $9,754 yesterday. Nickel fell 2.3 percent to $24,580 a ton and zinc declined 2.2 percent to $2,415 a ton. Quantitative Easing Fed officials arranged their second round of quantitative easing, known as QE2, in November as the U.S. unemployment rate held near 10 percent. Vincent Reinhart, who was the Fed’s chief monetary-policy strategist from 2001 until September 2007, said unemployment may lead the central bank to extend its purchases beyond the current plan. “The market rallied a long way and people are thinking this can’t continue,” said Jesper Dannesboe, a senior commodity strategist at Societe Generale SA in London. “It makes sense to take a bit of profit. We’re going to see higher prices this year.” Among agricultural commodities, robusta-coffee futures for March delivery lost $98, or 4.7 percent, to $1,974 a ton on the NYSE Liffe exchange in London. Refined sugar for March delivery slipped 0.6 percent to $756 a ton. Corn futures for March delivery fell 1.2 percent to $6.0125 a bushel on the Chicago Board of Trade. Wheat for March delivery fell 1.4 percent to $7.785 a bushel in Chicago. Debt Crisis The euro declined against the dollar for a third day amid concern that Europe’s debt crisis will persist, making it difficult for governments to raise funds. Switzerland’s central bank won’t take Irish government bonds due to be repaid between 2011 and 2025 as collateral, the Irish Independent reported today, citing data from the bank. Portugal’s sale of six-month bills today fetched higher yields than in a previous auction. Palladium, the best-performing precious metal last year, slipped 2.4 percent to $759.72 an ounce. Silver lost 1.5 percent to $29.305 an ounce and platinum was 2.2 percent lower at $1,719.25 an ounce. Gold was little changed at $1,379.10 an ounce. Crude oil for February delivery declined 1.4 percent to $88.16 a barrel in electronic trading on the New York Mercantile Exchange, after yesterday falling 2.4 percent. To contact the reporter on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net.

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