Gold falls after chart-driven trade, China rates
SINGAPORE, Feb 9 (Reuters) - Gold slipped, after rising 1 percent the previous session, as investors and other physical buyers in Asia hugged the sidelines following China's second interest rate increase in just over six weeks.
"I think we could look for further gains in gold on follow-through strength," said Ong Yi Ling, investment analyst at Phillip Futures in Singapore. "Investors were already expecting that China would raise interest rates sometimes during this Lunar New Year holiday."
OIL: Oil inches up on surprise U.S. inventory drawdown
PERTH, Feb 9 (Reuters) - U.S. crude oil prices rose slightly on Wednesday after news that oil inventories in the United States, the world's largest oil consumer, dropped unexpectedly and ship movements in the Suez Canal remained unaffected by the unrest in Egypt.
The American Petroleum Institute reported an unexpected drawdown in U.S. crude stocks last week, contrary to analyst expectations.
COMMODITIES: Markets rebound from drop on China rate hike
NEW YORK, Feb 8 (Reuters) - Wheat jumped on Tuesday, hitting near 30-month highs, while other commodities rebounded from early losses as investors deemed China's latest rate hike inadequate to slow the country's hunger for raw materials.
"China probably needs to raise rates by 100 basis points," said Sterling Smith, commodities analyst at Country Hedging in St. Paul, Minnesota. "That will probably deliver a message that would slow some things down fairly quickly."
GLOBAL MARKETS:Asian markets take China rate hike in their stride
SINGAPORE, Feb 9 (Reuters) - Shares in Asian developed markets rose and the dollar and Swiss franc eased on Wednesday as investors bet that China's latest interest rate rise would not derail hopes of a sustained economic recovery.
"Chinese policymakers' efforts to rein in overheating pressures are now seen in a relatively more positive light by global investors in that they will help slow growth to a more sustainable pace, while other engines of growth in the region begin to rev up," said Samarjit Shankar, analyst at BNY Mellon.
China Wheat Production At Risk From Severe Drought - FAO (Source: CME)
Severe drought in China's main winter wheat region, could pose a serious threat to the Asian giant's output at a time when world markets are already strained, the United Nation's food body said. The Food and Agriculture Organization said some 5.16 million hectares out of the total of about 14 million hectares under winter wheat could be under threat from poor rainfall and low snowcover. "The ongoing drought is potentially a serious problem," the FAO said in a special report. The Chinese government has allocated $15 billion to help farmers in areas at risk but so far temperatures have remained mild enough that the crop has not been killed by frost. But Standard Chartered said that any reduction in production could put severe pressure on already strained world markets.
"Should conditions in China worsen, the immediate risk is for additional grain import demand in the current season," the bank said. World wheat prices are hovering at highs not seen since the 2007-08 food crisis as a surge of demand from North African and Middle-Eastern governments has pushed up prices this year. China's national average retail price of wheat flour rose 8% in the two months to January and are 16% higher than a year earlier as concerns have mounted over the effect of the drought, the FAO said. The country's grain imports are pegged at under 6,000 tons this year compared to 128,000 tons the year before.
ECB could hike rates before liquidity exit-Mersch
LUXEMBOURG, Feb 7 (Reuters) - The European Central Bank could raise interest rates to contain inflation even before it exited measures to support liquidity in the euro zone, Governing Council member Yves Mersch said on Monday.
Mersch said inflationary pressures were undoubtedly rising, principally because of increasing commodity prices, against which the ECB was powerless to act.
PRECIOUS-Gold edges up, gains tempered by China
LONDON, Feb 8 (Reuters) - Gold edged up for a second day on Tuesday, shrugging off a rise in China's benchmark interest rates, while equities fell, the euro picked up and flows of metal out of exchange-traded funds stabilised.
The gold price came under intense pressure last week after more signs emerged that global growth continues to improve and that the euro zone debt crisis has not worsened, which eroded some investor appetite for the metal.
FOREX-Australian dollar slips after China rate rise
LONDON, Feb 8 (Reuters) - The Australian dollar slipped on Tuesday after a Chinese interest rate rise spurred speculation growth in the world's No. 2 economy may slow, while the euro rose against the dollar, boosted by Asian demand.
China's central bank raised its benchmark one-year deposit rate by 25 basis points to 3 percent on Tuesday, its second increase in just over a month in its intensifying fight against stubbornly high inflation.
European stocks, oil turn lower after China
LONDON, Feb 8 (Reuters) - European stocks and oil prices turned lower after China raised interest rates for the second time in just over a month, intensifying its fight against inflation.The commodity-sensitive Australian dollar also fell but world stocks still held near the previous day's 29-month high as China's monetary tightening did little to immediately change the favourable outlook for global growth this year.
"It is a clear concern of the markets that a tightening in policy in China will have a dampening effect on demand growth, but probably what more you're seeing here is a knee-jerk reaction to the initial news," said Gayle Berry, analyst at Barclays Capital.
USDA to further tighten U.S., world soy stocks
CHICAGO, Feb. 7 (Reuters) - The U.S. Department of Agriculture is expected to report additional tightening of U.S. and global soybean ending stocks in its February report, with total supply pared by high levels of exports, analysts said Monday.
"Red-hot, old-crop soybean exports suggest USDA should lower its forecast of ending stocks to under 100 million bushels," said Bryce Knorr at Farm Futures magazine, but he added the agency was not likely to make such a dramatic move.
USDA to trim wheat stocks view; exports remain high
CHICAGO, Feb 7 (Reuters) - The U.S. Agriculture Department was expected to trim its forecast for wheat ending stocks as export demand remains firm even with prices trending near 30-month highs, traders and analysts said.
Problems with crop production in Australia as well as the lingering effects of last summer's drought in the Black Sea region have boosted the role of the United States on the export market.
