Commodities gain on outlook for stronger emerging markets

Commodities rose for the first day in three as the outlook for increased demand from emerging markets prompted speculation that this month's decline was excessive.

The Standard & Poor's GSCI Index of 24 raw materials gained as much as 1.6 per cent, the most since May 9, and was up 1.3 per cent at 681.76 by 11:32 am London time. It fell 11 per cent this month before on Wednesday after touching the highest level since 2008 on April 11. Zinc added as much as 3.7 per cent in London trading, and raw sugar rose as much as 3.8 per cent in New York.

Investment spending in emerging markets is outpacing expenditures in developed economies for the first time as a surge in infrastructure supports global growth and profits. Bulls say economic expansion, led by China, India and Brazil, is raising demand at a time when producers from mining industry leader BHP Billiton Ltd. to oil company BP Plc can't keep up.

"We still see strong demand from emerging economies" for raw materials including oil, said Ong Yi Ling, a Singapore-based investment strategist at Phillip Futures Pte. "Some investors are returning to the markets."

International Monetary Fund data show investment will top 24 per cent of global gross domestic product in 2012, the most in more than two decades. Michael Saunders, Citigroup Inc.'s chief European economist, has calculated that developing nations will probably secure the largest share of it this year.

COPPER GAINS
Copper for three-month delivery reached a one-week high of $8,955.25 a metric ton on the London Metal Exchange and was last up 1.5 per cent at $8,929.50. The contract, which dropped 5.6 per cent this month as of yesterday's close, also climbed before Wednesday's options expiry and settlement.

Copper demand from China's cable makers, the biggest user in the world's largest market, will more than double over the next 10 years, gaining as much as 15 per cent annually, according to Hu An Cable Holdings Ltd. The company used 360,000 tons of the metal for cables, rods and wires last year.