KUALA LUMPUR: Commodities fell in Asia, led by crude oil, after China's slowing manufacturing industry heightened concerns that Europe's sovereign debt crisis is spreading, sapping demand for fuel and metals.
Data showing the US economy, the world's largest, grew at a slower than expected rate in the third quarter also added to the gloomy outlook, especially weighing on crude oil futures.
Brent crude fell below $108 a barrel, declining for five out of the last six sessions. Corn and soybeans erased their previous-session gains while wheat extended declines into a fourth day.
"The general market sentiment is still very fragile and weak data tends to ignite market concerns about global growth, with risk sentiment easily taking a hit," said Prakriti Sofat, a regional economist at Barclays Capital in Singapore.
"Exports are an important component of China's economy."
The HSBC flash manufacturing purchasing managers' index, the earliest indicator of China's industrial activity, slumped in November to 48, the lowest since March 2009. A reading below 50 indicates contraction.
The release came on the heels of a World Bank forecast that China's economic growth would moderate starting next year as it faces growing risks from the euro zone crisis.
The US economy grew at a 2.0 percent annual rate in the third quarter, down from the previously reported 2.5 percent.
Concerns that Europe's debt crisis will drag on were heightened by credit rating agency Moody's, which said a recent increase in interest rates on French government debt and weaker economic growth prospects could be negative for its credit rating.
The euro zone woes and prospect of a hard landing in China, the world's second largest economy, weighed on gold as well.
Bullion, a traditional safe haven during time of economic turmoil, has largely moved in tandem with riskier assets in recent months as heavy sell-offs in other markets force gold investors to liquidate their profitable positions.
Spot gold edged up 0.4 percent to $1,706.59 an ounce by 0502 GMT, extending an increase of more than 1 percent in the previous session.
Copper trimmed gains after the factory activity data from China, the world's largest consumer of the industrial metal.
Three-month copper on the London Metal Exchange rose 0.2 percent to $7,346 a tonne, extending modest gains from the previous session, but well off the day's peak of $7,462.75.
Asian shares were also hit by the Chinese data. MSCI's broadest index of Asia Pacific shares outside Japan fell 1.9 percent, with the materials , energy and technology sectors leading losses.
Tokyo markets were closed for a holiday.
The slowing economies of the world's two top consumers of oil, the United States and China, prompted JPMorgan Chase & Co to cut its forecasts for Brent and West Texas Intermediate (WTI) crude for 2012.
Rising supply, policy failures in the United States and Europe, and signs of weaker growth in China have darkened the outlook for commodities in the next six months, the bank said.
"The headwind of economic and financial market risks is turning into a gale at the same time that Libyan production is ramping up," JPMorgan's analysts, led by Lawrence Eagles, said in a note.
The market is receiving more supply from Libya and the Middle East while economic uncertainty increased as Europe and the United States struggled with debt issues, the bank said, adding that it expects Brent to fall to $105 and WTI to $94 by the end of the first quarter next year.
ICE Brent January crude fell 90 cents to $108.13 a barrel, after earlier touching an intraday low of $107.89.
US January crude was down $1.15 at $96.86 a barrel.
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