Commodities rose to the highest in almost two weeks after the Federal Reserve cut the cost of emergency funding for banks in Europe as part of a global effort to stem the region’s sovereign-debt crisis.
The Standard & Poor’s GSCI index of 24 raw materials rose 0.7 percent to settle at 658.02 at 4:04 p.m. New York time. Earlier, the measure reached 664.56, the highest since Nov. 17. Industrial and precious metals led the rally. In the two weeks ended Nov. 25, the GSCI gauge dropped 4.5 percent as borrowing costs surged in Europe, imperiling the euro and banks.
The Fed’s move was coordinated with the European Central Bank and central banks in Canada, England, Japan and Switzerland. Separately, China cut the amount of cash that banks must set aside as reserves for the first time since 2008. Global stocks rallied.
“First and foremost, the cut has a signal value,” Ole Hansen, a senior manager of trading advisory at Saxo Bank A/S in Copenhagen, said in an e-mail. “A lower cost on liquidity is also supportive for commodities.”
In New York, copper futures soared 5.5 percent, and gold climbed to the highest in almost two weeks. Crude oil topped $101 a barrel.
In London, aluminum rose 5.7 percent, and nickel, zinc, lead and tin gained.
The dollar dropped for the third straight day against a currency basket including the euro and yen, enhancing the appeal of raw materials.
“Today’s central bank intervention supports the argument that governments are likely to try and transition the sovereign-debt crisis by devaluing currencies,” James Dailey, who manages $215 million at TEAM Financial Management LLC in Harrisburg, Pennsylvania, said in an e-mail. “Devaluing currencies make commodities attractive on a relative basis. I would characterize it as a step in the inflation direction.”
The GSCI index has gained 4.1 percent this year. The gauge is down 14 percent from a 32-month high of 762.22 on April 11.