(BN) #Commodities Drop a 6th Day as Greek Crisis Fuels Concerns

Bloomberg News reports,

 "Investors should adopt the fetal position," said John Stephenson, who helps to manage $2.7 billion at First Asset Investment Management Inc. in Toronto, forecasting that commodity prices may extend declines

Commodities Drop a 6th Day as Greek Crisis Fuels Concerns

Commodities fell for a sixth day in the longest losing streak since August amid a global equity rout on concern that Greek leaders will back out of bailout agreements, endangering the country's role in the euro zone and threatening the global recovery.

The Standard & Poor's GSCI Spot Index (MXWD), which tracks 24 raw materials, lost 0.5 percent to 645.6 at 11:33 a.m. in New York, leaving the gauge up 0.1 percent this year. The index fell as low as 641.8 yesterday, eliminating the year's gains, as the euro extended a drop. Silver and gold plunged to four-month lows. The MSCI All-Country World Index of equities slumped to the lowest level since January.

Corn, wheat and zinc led declines in commodities after the head of Greece's biggest party failed to reach an agreement on a new government, passing responsibility for forming an administration to Alexis Tsipras of the Syriza party, who said he'll cancel the bailout. Services and manufacturing shrank in April in the euro region, and unemployment soared to a 15-year high, according to reports last week. The U.S. added fewer jobs than forecast last month, government data showed last week.

"Investors should adopt the fetal position," said John Stephenson, who helps to manage $2.7 billion at First Asset Investment Management Inc. in Toronto, forecasting that commodity prices may extend declines.

Oil fell for a sixth day, the longest slump in almost two years, with the June-delivery contract declining as much as 1.9 percent to $95.17 a barrel on the New York Mercantile Exchange. June-delivery gold lost as much as 1.6 percent to $1,578.50 an ounce, the lowest since Jan. 3. Silver for July delivery fell as much as 2.9 percent to a fourth-month low of $28.615 an ounce.

'Off the Table'

"You've got U.S. growth, which looked promising, softening," Stephenson said. "You've got Europe clearly in the middle of a crisis, and you've got China still reluctant to be accommodative. For a while, global growth is off the table."

In Greece, Tsipras said he expected Antonis Samaras of New Democracy and Evangelos Venizelos, who leads Pasok, to revoke written pledges to implement austerity. Both rejected the call.

The euro dropped for an eighth straight session to the lowest since late January. European stocks fell to the lowest level in almost four months and Spanish default risk climbed to a record.

Base metals declined, with zinc falling as much as 2.5 percent to $1,925.75 a metric ton on the London Metal Exchange, the lowest since Jan. 12. Lead dropped as much as 2.2 percent. Wheat prices fell 1.8 percent, heading for the biggest decline in a week on the Chicago Board of Trade, on the outlook for increased U.S. supplies.

"Political turmoil in Greece raised concerns that the nation may not implement austerity measures and worsen Europe's debt crisis," Ken Kajisa, an analyst at broker ACE Koeki Co. in Tokyo, said by telephone. "Risk aversion by investors increased, leading to sales of industrial commodities."

To contact the reporters on this story: Elizabeth Campbell in Chicago at ecampbell14@bloomberg.net; Glenys Sim in Singapore at gsim4@bloomberg.net

To contact the editors responsible for this story: James Poole at jpoole4@bloomberg.net; Steve Stroth at sstroth@bloomberg.net