Oct. 29 (Bloomberg) -- Crude oil, copper, wheat and sugar led the biggest commodity surge in at least five decades on expectations that lower borrowing costs will aid a rebound in demand for raw materials.

The Reuters/Jefferies CRB Index of 19 raw materials rose as much as 6.4 percent, the most since at least 1956, when the data begin. China, the world's largest consumer of industrial metals, cut interest rates for a third time in two months. The U.S., the biggest oil user, may lower its benchmark rate to 1 percent today, according to the median forecast of economists surveyed by Bloomberg.

``Commodities are pricing in a recovery in demand that will be sooner than people had earlier expected,'' said Eugen Weinberg, a commodities analyst at Commerzbank AG in Frankfurt. A decline in the dollar against currencies such as the euro and a rebound in global stock markets also buoyed commodities, he said.

The Federal Reserve has already cut the benchmark rate from 5.25 percent in the past 13 months to 1.5 percent and created six lending programs channeling more than $1 trillion into the financial system. The MSCI World Index of equities has plunged 41 percent since the start of the year.

Crude oil for December delivery climbed as much as $6.18, or 9.9 percent, to $68.91 a barrel on the New York Mercantile Exchange and was at $67.72 as of 12:16 p.m. The price reached a record $147.27 on July 11.

`Feel-Good Factor'

The Standard & Poor's GSCI Index of 24 commodities jumped as much as 8.1 percent, the most since at least 1970. Before today, the index had dropped 32 percent this month, heading for its worst performance in more than 38 years.

``It's all moving on the back of the equity feel-good factor,'' said Robert Laughlin, a senior broker with MF Global Ltd. in London. ``The fundamentals of the oil market have gone for the moment.''

The Organization of Petroleum Exporting Countries will ``probably'' cut its output quotas a second time to avoid the growth of crude-oil inventories, Venezuelan Oil Minister Rafael Ramirez said in an interview on state television. The group reduced its output target by 1.5 million barrels a day after meeting Oct. 24.

Metals Advance

On the London Metal Exchange, industrial metals rallied. Copper for delivery in three months jumped $525, or 13 percent, to $4,655 a metric ton. Aluminum advanced 2.7 percent, nickel 7.8 percent and zinc 7 percent. The LME index of six metals has retreated for six consecutive weeks as copper and aluminum slumped to their lowest in three years.

A jump in stock prices is positive for copper ``the same way they've been negative'' as equities fell, said Kevin Tuohy, a trader at MF Global Ltd. in London. ``If you look at the chart, copper mirrors equities.''

Gold also advanced as the dollar weakened against the euro, buoying demand for the U.S. currency as an alternative investment. Gold futures for December delivery rose $16.70, or 2.3 percent, to $757.20 an ounce on the Comex division of the New York Mercantile Exchange. The metal reached a record $1,033.90 on March 17. Silver futures were the biggest gainers, jumping 12 percent to $9.835 an ounce. Palladium and platinum also rose.

``It's a buying opportunity for gold, the selling pressure on the dollar is high,'' Liran Kapeluto, a senior dealer at trading-system operator Finotec Trading U.K. Ltd., said by telephone from London.

Agriculture Strengthens

Corn and wheat rose the maximum permitted by the Chicago Board of Trade on speculation lower borrowing costs will revive demand for grains that earlier this month slumped to their lowest prices this year. Soybeans rose the most in 20 years.

Corn futures for December delivery surged the 30-cent daily limit, or 7.7 percent, to $4.2075 a bushel at 11:03 a.m. on the Chicago Board of Trade, heading for the first limit-up close since Sept. 12. The price on Oct. 27 touched $3.64, the lowest since Oct. 25, 2007. The most-active futures before today fell 51 percent from a record $7.9925 on June 27.

Soybean futures for January delivery gained 67 cents, or 7.6 percent, to $9.55 a bushel in Chicago. A close at that price would be the biggest gain since August 1988. Before today, the most-active futures fell 15 percent this month and 46 percent since touching a record $16.3675 on July 3. On Oct. 16, the price touched $8.38, the lowest since August 2007.

Wheat futures for December delivery rose the CBOT limit of 60 cents, or 12 percent, to $5.74 a bushel. A close at that price would be the biggest one-day gain since at least 1972. Futures still are down 58 percent from a record $13.495 on Feb. 27.

To contact the reporter on this story: Chanyaporn Chanjaroen in London at cchanjaroen@bloomberg.net

Last Updated: October 29, 2008 12:51 EDT