Global commodities climb to 2-year high

Equities also advance as earnings beat estimates for eight straight quarters

Commodities rose to a two-year high following industry takeovers and evidence economic growth is being sustained, and stocks gained for a fifth straight day. European default risk fell to a three-year low, and the dollar weakened versus the yen for the first time since March 23.

The Standard & Poor’s GSCI index of 24 raw materials added 0.5 per cent at 11.13 am in New York. The MSCI All-Country World Index of shares in 45 nations climbed 0.3 per cent, and the S&P 500 swung between gains and losses as chipmakers slumped. Contracts on the Markit iTraxx Crossover Index of 40 European companies with mostly high-yield credit ratings fell five basis points to 368. The dollar lost 0.2 per cent to 83.88 yen.

Minmetals Resources Ltd (1,208) made an unsolicited offer of about $6.5 billion for Perth-based Equinox Minerals Ltd (EQN) to gain control of Africa’s largest copper mine. Solvay SA (SOLB) agreed to buy Rhodia SA (RHA) for about $4.8 billion to add specialty chemicals. Raw-materials producers led global equities higher. Stocks also gained for a second day after the US unemployment rate unexpected decreased to a two-year low of 8.8 per cent.

“It’s a perfect recipe for M&A activity,” said Philip Orlando, the New York-based chief equity market strategist at Federated Investors, which manages $358.2 billion. “The global economy continues to heal. Commodity prices are rising. In addition, you still got a tonne of cash out there and stock prices are relatively inexpensive. It’s not at all surprising that those trends are converging.”

Global takeovers
The S&P/GSCI index has risen 16 per cent this year while the MSCI gauge of worldwide stocks has advanced 4.9 per cent. There have been 6,192 deals announced globally this year, totaling $635.5 billion, a 25 per cent increase from the $506.5 billion in the same period in 2010, according to data compiled by Bloomberg. Equities have also advanced amid government stimulus measures and corporate earnings that beat analysts’ estimates for eight straight quarters.

Copper for May delivery gained 0.1 per cent to $4.3 a pound in New York following the Minmetals bid for Equinox Minerals. The metal for delivery in three months climbed 0.2 per cent to $9,375 a metric tonne on the London Metal Exchange. Lead climbed as much as 5.1 per cent to $2,835 a tonne, the highest price since April 2008.

Codelco, the world’s biggest copper producer, remains optimistic about Chinese demand for the metal, Chief Executive Officer Diego Hernandez said.

Corn, Hong Kong
Corn prices climbed to the highest since July 2008 after a government report showed shrinking US inventories, while storms in the Midwest threatened to delay spring planting. Futures for May delivery rose 15.75 cents, or 2.1 per cent, to $7.5 a bushel after touching $7.6, the highest for a most-active contract since July 7, 2008. Prices have more than doubled in the past year as global supplies plunged.

Indexes for stocks in Hong Kong, Norway, Canada, India and China gained more than 0.7 per cent. The S&P 500, the benchmark measure of US shares, swung between a loss of 0.1 per cent and a gain of 0.3 per cent. Intel Corporation (INTC) fell the most in the Dow Jones Industrial Average, losing 1.5 per cent, as the Semi-conductor Industry Association said three-month average sales dropped 1.1 per cent in February.