Most commodities prices tumbled Thursday on concerns that a global economic recovery isn't as strong as hoped and as debt problems mount in Europe.
Price for oil, metal and other basic materials fell sharply as investors reduced their appetite for risk. Stocks and other riskier assets like commodities tumbled as funds moved to safe havens like Treasurys and the dollar.
The Dow Jones industrials fell nearly 270 points, trading briefly below 10,000 for the first time since November. The ICE Futures US dollar index, which measures the dollar against six other currencies, rose 0.7 percent.
The weak dollar was a further blow to commodities prices, which often move inversely to the U.S. currency. When investors pile into dollars, sending it higher, that makes dollar-priced commodities less affordable to overseas investors.
The latest trigger for a stampede out of riskier assets was a mounting sense that three weaker members of the euro currency bloc -- Greece, Portugal and Spain -- will have more difficulty than anticipated pushing through tough austerity measures meant to control their mounting budget deficits.
Meanwhile the newest sign of weakness in the U.S. labor market, an unexpected rise in initial claims for jobless benefits, spooked investors who had been hoping that the jobs situation was finally getting better.
"Markets are starting to get discouraged" that countries are seeing few signs of tangible growth despite massive stimulus measures, said Michael Fitzpatrick, a vice president of energy at MF Global. That has led to a "diminishing taste for risk," he said.
Gold, which typically trades opposite the dollar, fell $49, or 4.4 percent, to settle at $1,063 an ounce. It's the lowest gold has traded since early November.
Other metals also fell. Traders had been pushing prices for industrial metals higher early this year because of expectations demand would increase as the economy strengthens. However news in recent weeks that China will put the brakes on its red-hot economy has dragged down metals prices. China is a major importer of industrial metals like copper.
Copper fell 9.45 cents, or 3.2 percent, to $2.879 a pound. Silver for March delivery fell 96.7 cents, or 5.9 percent, to settle at $15.35 an ounce.
April platinum tumbled $60.90, or 3.9 percent, to $1,515.30 an ounce. Palladium for March delivery fell $28.40, or 6.5 percent, to $408.40 an ounce.
Energy prices also fell sharply. Benchmark crude for March delivery fell $3.84, or 5 percent, to settle at $73.14 a gallon on the New York Mercantile Exchange.
In other Nymex trading, heating oil dropped 8.42 cents, or 4.2 percent, to $1.9352 a gallon, while gasoline fell 8.54 cents, or 4.2 percent, to $1.9508 a gallon.
Grains were the few commodities to buck the trend. All rose for the second time in three days. Oversupply concerns had been dragging down prices most of the past month.
Wheat for March delivery rose 6.75 cents to settle at $4.7575 a bushel. Soybeans rose 6 cents to $9.14 a bushel, while corn rose 1 cent to $3.54 a bushel.
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