NEW YORK: Commodities plunged for a fourth day on Thursday, dragging down stocks and fueling demand for safe-haven assets, after new data cast more doubts on the strength of the global economic recovery.
US crude oil prices plunged nearly 6 percent and a benchmark index of world stocks lost around 0.7 percent as reports showed weekly US jobless claims jumped to an eight-month high after the country's productivity growth slowed in the first quarter.
European stocks closed down, also pressured by data showing German industrial orders declined unexpectedly in March. The fall was cushioned, however, by bets the European Central Bank will refrain from raising interest rates in June.
US stock indexes opened more than 0.5 percent lower, but the Nasdaq later pared losses. Some economists said seasonal factors related to the Easter holiday may have distorted the jobless claims data.
"I think we're in a situation where the markets and the Fed have been too optimistic," said Bob Andres, chief investment strategist with Merion Wealth Partners in Berwyn, Pennsylvania.
"I don't think we're going to fall off a cliff but the road to real recovery and full unemployment is going to take a long time, and people ought to get back into that mode."
The Dow Jones industrial average fell 97.48 points, or 0.77 percent, to 12,626.10, while the Standard & Poor's 500 Index lost 8.39 points, or 0.62 percent, to 1,338.93. The Nasdaq Composite Index was down 2.88 points, or 0.10 percent, at 2,825.35.
In Europe, the FTSEurofirst 300 closed 0.36 percent lower after falling 1.4 percent on Wednesday.
The MSCI All-Country World index fell 0.7 percent while the MSCI stock index for emerging markets was 0.8 percent lower.
Before this week's decline, world stocks had risen more than 8.0 percent this year on investor confidence in strong corporate earnings and robust growth in emerging markets.
Among the safe-havens benefited by Thursday's data, 10-year US Treasury notes jumped 13/32 in price, while its yield fell to 3.174 percent. The Japanese yen gained around 0.7 percent against the US dollar, at 79.95.
The euro fell against the US dollar after European Central Bank President Jean-Claude Trichet, speaking at a monthly news conference, was less hawkish than some had expected on future rate hikes.
The euro was down 1.52 percent against the greenback, at $1.4595, after Trichet mentioned upside risks on prices but did not use the phrase "strong vigilance," which traders said suggests the ECB won't hike rates again in June.
COMMODITIES SUFFER
Commodities extended their sell-off into a fourth consecutive day as investors worried about faltering economic growth in major economies and excessive monetary tightening in China, the world's top consumer of raw materials.
US crude oil prices fell 5.7 percent to $102.99 a barrel, while Brent crude lost 5.7 percent to $114.24 a barrel. The decline is the biggest weekly fall for Brent and US crude since the week ended July 4, 2010.
The Reuters-Jefferies CRB index, a global benchmark for commodities prices, dropped 3.6 percent on Thursday. It has lost about 6 percent so far this week.
Silver was set for its deepest weekly decline since the late 1980s after the CME Group, in a move to curb speculation, raised margin requirements for the 5,000-ounce COMEX silver futures contract.
At just below $38 an ounce, silver has fallen around 20 percent so far this week, with investors taking profits from a recent rally that took it to a 31-year high just shy of $50 an ounce.
"I think what's happening is risk aversion across all the asset classes. Everyone thought the US was on a growth trajectory, but now some talk out of the US is showing pretty mediocre growth," said Patrick Armstrong of Armstrong Investment Managers in AFP.
"We have not been adding any commodity exposure in the dips, but we're still positive on commodities. US dollar depreciation in future will provide a positive tail wind," he added.
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