* Feel-good mood after German court decision fades quickly
* Commodities, at multi-month highs after rally, erase gains
* Day's winners seek secular catalysts: soybeans, platinum
* All eyes on FOMC decision on Thursday, Bernanke presser
By Veronica Brown and Jonathan Leff
LONDON/NEW YORK, Sept 12 (Reuters) - A four-day rally in
commodity markets faltered on Wednesday, with signs of higher
oil and grain supplies tempering optimism over a German court's
approval of a euro zone bailout fund and expectations of more
monetary easing from the U.S. Federal Reserve.
While select markets such as platinum, aluminum and soybeans
carried on rising, broader risk assets, including oil, gold and
copper, pulled back from early session peaks to close little
changed on the day, with some traders pocketing recent gains
that lifted prices to their highest in months.
Raw materials rose earlier in the day after the German court
cleared the way for Germany to back the euro zone's new 700
billion euro European Stability Mechanism, boosting the bloc's
ability to face up to its debt crisis.
"There is some 'buy the rumor, sell the fact' selling going
on. The retreat in commodities is somewhat expected when you had
a big momentum run into the news," said Sean McGillivray, head
of asset allocation for Great Pacific Wealth Management in
Oregon.
Now traders are positioning ahead of the Fed's two-day
policy meeting that began on Wednesday, widely expected to
approve a third dose of bond buying - or quantitative easing
(QE) - to kick-start the economy, a stimulus that many expect to
stoke further buying of commodities.
The meeting, which is also expected to extend the central
bank's zero interest rate pledge to 2015, will end on Thursday.
The result is expected to be released at 12:30 p.m. EST (1630
GMT), while Chairman Ben Bernanke will hold a press briefing at
2:15 p.m.
"Once again the big question is QE or not," said Gabriel
Garcin, a portfolio manager at Europanel Research Alternative
Asset Management in Paris, which invests in European hedge funds
and CTAs.
"If they do, it could really push up prices. Then once again
the drivers of commodity prices would shift from supply demand
fundamentals to more risk-on, buy everything that are risky
assets."
The Thomson Reuters-Jefferies CRB commodity index
rose 0.25 percent, pausing after a four-day 2.1 percent rise
took the index to its highest since March.
Stock markets and the euro also got a brief shot in the arm
from the German court decision, but it proved fleeting. U.S.
stock markets were marginally higher near the close, while the
dollar index dipped 0.15 percent.
GRAINS SPLIT ON USDA
Chicago grain markets registered a split decision on the
monthly U.S. Agriculture Department crop report, with corn
dropping more than 1 percent to $7.69-1/2 per bushel after the
data suggested this summer's deep drought had done less damage
than expected to corn stalks at the end of the growing season.
"At least initially looking at the headline numbers, it's
going to take some of the fear of super short production out of
this market," Jack Scoville, vice president of Price Futures
Group, said about corn.
But soybean prices kicked 2.6 percent higher to
$17.45-3/4 per bushel, pushing back toward a record high after a
five-day slide. A smaller than expected production forecast and
concerns that farmers might harvest fewer acres than the USDA
estimates fueled gains.
OIL TEMPERED BY STOCK DATA
Brent crude for October delivery, which expires on
Thursday, rose 56 cents, or 0.49 percent, to settle at $115.96 a
barrel, paring gains after an early push to a one-month high of
$116.67. Second-month November Brent rose 0.3 percent.
Early gains were driven both by the German decision and by
news that the U.S. ambassador to Libya and three other embassy
staff had been killed by militants in a rocket attack, reviving
geopolitical risk in the OPEC producer.
But U.S. inventory data showing an unexpected nearly
2-million barrel rise in crude stockpiles last week - opposite
to forecasts of a 2.6-million barrel decline - knocked the wind
out of prices, already fading in line with other risk assets.
METALS RIDE UP
London copper eked out a tiny gain after a strong
three-day run pushed prices above $8,000 a tonne for the first
time since May, while aluminium clung to its ninth
consecutive gain, both buoyed by QE hopes, as well as Chinese
infrastructure spending that should pump up demand.
Gold, which has come back to life in recent weeks
after being rangebound for four months, also pulled back from a
six-month peak to trade at $1,731 an ounce, barely changed.
Silver fell by nearly 1 percent.
While many analysts anticipate further bullion gains as Fed
action weighs on the dollar and stokes inflation, the focus for
the day was on platinum, which jumped another 2.8 percent
to a more than five-month high amid spreading unrest in South
Africa, which controls around 80 percent of global output.
South African police said striking miners blockaded roads
leading to shafts belonging to number one producer Anglo
American Platinum Ltd. The price has risen by nearly 20
percent since a strike at number three producer Lonmin Plc
turned violent last month.
"The situation is delicate, very politically sensitive. But
we have to sit back and take a more neutral look at the market
and say this is all sentiment driven," Societe Generale analyst
Robin Bhar said. "It's debatable as to how much of a sustained
rise this will be once the dust has settled."
Prices at 3:37 p.m. EST (1937 GMT)
LAST/ NET PCT YTD
CLOSE CHG CHG CHG
US crude 96.81 -0.36 -0.4% -2.0%
Brent crude 115.65 0.25 0.2% 7.7%
Natural gas 3.063 0.071 2.4% 2.5%
US gold 1733.70 -1.20 -0.1% 10.7%
Gold 1731.26 -0.38 0.0% 10.7%
US Copper 371.00 -0.45 -0.1% 8.0%
LME Copper 8096.00 6.00 0.1% 6.5%
Dollar 79.718 -0.139 -0.2% -0.6%
CRB 315.700 0.800 0.3% 3.4%
US corn 769.50 -8.25 -1.1% 19.0%
US soybeans 1745.75 44.25 2.6% 45.7%
US wheat 890.00 6.25 0.7% 36.3%
US Coffee 177.50 -0.05 0.0% -22.2%
US Cocoa 2631.00 -1.00 0.0% 24.8%
US Sugar 19.72 0.28 1.4% -15.1%
US silver 33.233 -0.276 -0.8% 19.1%
US platinum 1648.60 42.60 2.7% 17.3%
US palladium 678.80 4.40 0.7% 3.5%
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