BY REUTERS

Posted 2/27/2007

World commodities markets took a hit Tuesday after a big slump in China’s benchmark stock market index rekindled worries about growth and demand from the key buyer.

China’s main stock index had its biggest decline in a decade ahead of a session of parliament beginning next week rumored to be considering higher interest rates to cool economic growth.

The slump sent shock waves across equity and commodities markets around the world.

“If China is going to slow its economy with an austerity program, that means they buy less commodities iron ore, steel, concrete and petroleum. But it bleeds over to the other markets. China is real important to what we do here,” said Roy Huckabay, analyst with the Linn Group in Chicago.

The Reuters-Jefferies CRB Index of 19 commodities futures slipped 0.58% to 313.26, recoiling from its highest level since Dec. 6 of 315.10 reached Monday.

Copper for March delivery fell 5.05 cents to $2.8050 on the New York Mercantile Exchange’s Comex division, after hitting its highest settlement since Jan. 2 on Monday.

Gold settled only slightly lower, down $2.60 an ounce at $687.20, but then fell sharply in electronic trade after the settlement. By 3:38 p.m. in New York, gold was down $23.60 at $666.20.

NYMEX April crude settled 7 cents higher at $61.46 a barrel Tuesday, but fell more than 60 cents in electronic trade after the settlement on weakness in the stock markets.

In London, ICE April Brent crude also pared gains and settled 3 cents higher, or 0.05%, at $61.36 a barrel, moving between $60.10 and $62.18.

NYMEX March RBOB gained 3.84 cents, or 2.2%, to settle at $1.8161 a gallon, after ranging from $1.7575 to $1.827.

The peak was the highest since prices reached $1.85 on Aug. 31. Resistance charted at $1.80 gave way. Support was pegged at $1.70.

NYMEX March heating oil rose 2.31 cents, or 1.3%, to $1.7793 per gallon, trading from $1.732 to $1.7925. Resistance was at $1.79, support at $1.72.

Chicago Board of Trade March corn fell 14 1/2 cents to $4.11 per bushel after topping Monday at $4.37, the highest price since July 1996.

Hedge funds and other investors have been betting that the growing demand for ethanol will keep corn in short supply.