Rally on eurozone optimism; CRB up most in a month

The euro posted its largest two-day gain against the dollar in more than a week, ahead of a vote in Athens' parliament on austerity measures tied to Greece's bailout, and a promise by Portugal to be frugal.

The dollar's drop pushed up prices of commodities denominated in the greenback. Oil rose 2 percent in London, and copper by more than 1 percent in New York.

The 19-commodity Reuters-Jefferies CRB index rose by 1.2 percent, heading for its biggest gain since May 25.

Analysts said, it was still early to say if commodities had reversed the sliding trend of the past couple of weeks, although there were signs that prices were stabilizing.

"We continue to believe that the short-term bias in most commodity complexes will be lower still, although the rate of decline may start to flatten out as prices start approaching more reasonable valuations, particularly in energy," said Edward Meir, analyst at MF Global in New York.

Brent crude oil in London rose by more than $3 a barrel to above $109 per barrel, after losing nearly $10 in the four previous sessions. US crude futures climbed nearly $1.60 a barrel to above $92, after sliding $5 in the same period.

US copper futures rose almost six cents a lb to a session high of $4.12, as an agreement by French banks to rollover Greek debt bolstered risk appetite.

Agricultural markets surged too, but more on bargain-hunting, after a recent sell-off. Concerns over the supply of certain crops, due to unfavorable weather also supported prices.

In grains markets, corn sending futures were up 1 percent in Chicago, heading for their biggest bounce in more than two weeks. The market rebounded from a three-month low ahead of a government crop report scheduled for Thursday.

Raw sugar surged 4.9 percent to a 3-1/2-month high in New York, on lower-than-expected crush data in top grower Brazil. Arabica coffee prices vaulted after a minor Brazilian coffee region was hit by frost.

Copyright Reuters, 2011