Commodity markets rattled by Ukraine airplane disaster

LONDON, July 18 (AFP) :  Global commodity markets were gripped this week by the Malaysian air crash, which has dramatically raised tensions between Russia -- a key producer of many raw materials -- and the West.
The doomed Malaysia Airlines MH17 flight, which crashed killing 298 people on Thursday, was "likely downed" by a surface-to-air missile fired from separatist-held eastern Ukraine, a US envoy said Friday.
Investor sentiment was already hit by broadened US sanctions on Russian energy, defence and financial firms to punish what Washington charges are violations of Ukraine's sovereignty.
"If Russia turns out to have played any part in (Thursday's) shooting down of a passenger plane over east Ukraine, there is a risk of sanctions being further tightened," Commerzbank analysts said in a research note.
"In this case, it would not only be gas prices in Europe that would react, but also the prices of oil, nickel, copper, aluminium, wheat and palladium -- after all, Russia is one of the world's biggest producers and exporters of these commodities."
Traders also tracked fast-moving developments in the Middle East, where Israel has launched a ground assault on Gaza.
OIL: Crude futures rose following the plane crash, and as Israel pursued a ground offensive into the Gaza Strip.
"There has been high uncertainty across equity and commodity markets this week, which caused fairly high levels of volatility in the oil market," Sucden analyst Myrto Sokou told AFP.
She added that Israel's assault on Gaza had also stoked oil supply worries in the crude-rich Middle East.
"Brent front month futures spiked above $108 per barrel in early trading (on Friday), supported by fresh concerns in Middle East," Sokou said.
Ukraine's government and western leaders have accused Russia of supporting the separatist rebellion in the country's east, but Moscow has denied the allegations.
Ukraine is also a major conduit for Russian gas exports to Europe.
Investors are keeping a wary eye on events in Gaza after Israel began a ground operation late on Thursday, the tenth day of an offensive to stamp out rocket fire from the Hamas-run enclave.
The assault follows a brief humanitarian truce and an urgent appeal by Washington and the UN that Israel redouble its efforts to avoid harm to civilians.
By Friday on London's Intercontinental Exchange, Brent North Sea crude for delivery in September rose to $107.66 per barrel from $106.99 for the August contract one week earlier.
On the New York Mercantile Exchange, West Texas Intermediate or light sweet crude for August jumped to $103.72 a barrel from $101.35.
PRECIOUS METALS: Gold prices faced a rollercoaster ride this week, hitting a three-and-a-half-week low on Tuesday before surging Thursday on safe-haven demand.
Gold is widely regarded as a safe bet by investors in times of geopolitical turmoil.
Palladium forged a new 13-year pinnacle at $889.30 per ounce -- last seen on February 23, 2001 -- propelled by fears over supplies from Russia, which is the world's top producer.
By Friday on the London Bullion Market, the price of gold fell to $1,307.25 an ounce from $1,335 a week earlier.
Silver decreased to $20.94 an ounce from $21.41.
On the London Platinum and Palladium Market, platinum declined to $1,497 an ounce from $1,506.
Palladium advanced to $881 an ounce from $867.
BASE METALS: Base or industrial metal prices enjoyed mixed fortunes in cautious trade amid stronger-than-expected second quarter growth in key consumer China.
China's National Bureau of Statistics said the economy grew by 7.5 per cent in April-June thanks to government stimulus measures.
SUGAR: Prices hit a three-month low in London at $445.60 per tonne, depressed by plentiful global supplies.
By Friday on LIFFE, London's futures exchange, the price of a tonne of white sugar for delivery in October stood at $451 compared with $457.10 a week earlier.
On the ICE Futures US exchange, the price of unrefined sugar for October dropped to 16.98 US cents a pound from 17.16 US cents a week earlier.
COFFEE: Prices went off the boil, falling to a five-month low at 159.25 cents per pound in New York on hopes of a bumper harvest in main producer Brazil.
"The advancing harvest in Brazil is generating selling pressure, as 50 per cent of the crop has already been brought in," said Commerzbank analysts.
COCOA: Prices diverged in a narrow band.
By Friday on LIFFE, cocoa for delivery in September nudged upwards to £1,919 a tonne from £1,912 a week earlier.