By Veronica Brown
LONDON, March 4 (Reuters) - A potent rally in commodity
markets showed no sign of slowing on Tuesday with resources from
platinum to rice at or near record highs, while oil held near
$102 a barrel, helping stock markets halt recent falls.
An ailing dollar also won brief respite from successive
falls to record lows versus the euro and a basket of major rival
currencies, as euro zone officials expressed concerns about the
single currency's sharp rise.
The greenback's recent woes have added fresh fuel to
fired-up commodity markets, raising the allure of
dollar-denominated resources including gold, platinum, food
commodities and crude oil for non-U.S. investors.
Spot platinum, elevated by solid fundamentals as well as
investment interest due to a power crisis in top producer South
Africa, hit a record $2,243 per ounce <XPT=>. while oil <CLc1>
held near $102 a barrel, off a record near $104 posted in the
previous session.
The Baltic Exchange's chief sea freight index <.BADI>, which
gauges the strength of major trade routes for bulk commodities,
has powered up by an eye-watering 40 percent in the last six
weeks.
Analysts said current lofty levels were not a deterrent to
further gains, with global economic uncertainty hastening the
need for portfolio diversification into commodities.
"I think we can drop the word 'alternative' from commodities
now," said Ross Norman, managing director of TheBullionDesk.com.
"This year is psyching itself up to be the year that
inflation re-emerges as a major topic. In that scenario people
are looking to invest in hard assets that hold their value
better than some other financial products -- commodities do very
well in that environment," he said.
Although gold hit a record above $980 per ounce <XAU=> on
Monday and is on track to reach $1,000, the metal is still some
way off the inflation-adjusted high of $2,187 per ounce, which
expresses the 1980 record high of $850 in today's money.
STOCKS, DOLLAR SNAP FALLS
The commodity market surge helped stock markets break a
string of recent declines. Japan's Nikkei benchmark average
<> rebounded from a six-week low to close flat.
European shares edged up early after four days of losses,
led by mining stocks. Miners Anglo American <AAL.L>, Rio Tinto
<RIO.L> and Lonmin <LMI.L> rose between 0.9 and 1.2 percent.
The FTSEurofirst 300 index <> of top European shares
was up 0.45 percent at 1,304.05 points, echoing a modest late
rally in U.S. equities on Monday that left Wall Street flat.
The dollar had plumbed record lows versus the euro and a
basket of currencies for five straight sessions as worries about
the U.S. economy sapped sentiment, but euro zone officials broke
the malaise with concerns about the single currency's climb.
The euro's surge beyond $1.50 prompted verbal intervention
by euro zone finance ministers as well as European Central Bank
President Jean-Claude Trichet.
In an indication of how seriously the ECB is taking recent
euro appreciation, Trichet broke with tradition and spoke
outside a formal news conference and stressed that Washington
favoured a strong dollar. Click on [] for more on
this.
"This is the first time that Trichet has backed up the case
of finance ministers and the fact the ECB are showing solidarity
with this verbal intervention, shows that Europe is taking a
different tack," said Adam Myers, strategist at Credit Suisse.
The euro stood at $1.5189, down 0.1 percent on the day, but
still fairly close to the $1.5275 high set the previous session
according to Reuters data <EUR=>.
The dollar's trade-weighted index against six major
currencies was at 73.712 <.DXY>, slightly above the 73.354 it
hit on Monday, its lowest level since it was created in 1973.
(Additional reporting by Simon Falush, Editing by Mike Peacock)
