Base metals declined Wednesday after the Commerce Department reported homebuilding slumped to its lowest level in 14 years, raising concerns that demand for copper and other raw materials could ebb, AP reported. In other commodity markets, agriculture futures ended mixed, while oil prices reached a peak and precious metals edged higher. Although housing news has been grim for more than a year, September's 10.2 percent drop in construction of new homes surprised analysts who on average expected a more modest 4.2 percent decline. It was the slowest pace since March 1993. With the housing downturn showing little sign of a bottom, investors retreated from the industrial metals key to building infrastructure. Zinc, which is used to coat steel, fell 2 percent on the London Metal Exchange, while tin prices slipped. Copper prices slipped in London and shed 4.5 cents to settle at $3.596 a pound on the New York Mercantile Exchange. Housing activity is nearly 31 percent below last year's level. Still, metals prices have held up relatively well as growth in China and supply constraints in several markets have outweighed problems in the U.S. housing industry, said Barclays Capital analyst Kevin Norrish, in a report. «While the U.S. remains the second-largest consumer of base metals, China's rapid economic growth and industrialization points towards an increasing dependence of base metals demand from China and other emerging markets,» he said. China is the No. 1 consumer of base metals; its use of aluminum, copper and other metals has tripled over the past decade to 30 percent of world demand, according to Barclays. Oil prices closed lower after an extremely volatile session that saw crude swing between an intraday low of $87.20 a barrel and an all-time peak of $89. The energy market was erratic, at first tumbling after a bearish report on petroleum inventories, then jumping on news of a possible Turkish military offensive against rebels in northern Iraq, which raised concerns that oil supplies from the region could be disrupted. Prices again came under pressure after the Fed reported a slowdown in economic growth. U.S. crude oil stockpiles increased by 1.8 million barrels, and gasoline inventories swelled by 2.8 million barrels last week, the Energy Information Administration reported Wednesday. Analysts polled by Dow Jones Newswires had expected crude and gasoline supplies would each rise by a more moderate 1 million barrels. Light, sweet crude for November delivery lost 21 cents to settle at $87.40, while gasoline futures dipped 2.71 cents to close at $2.1466 a gallon on the Nymex. The Fed on Wednesday said economic activity lost momentum in the third quarter, as growth in the manufacturing and service sectors slowed. In its Beige Book report, the central bank also said businesses indicated increasing uncertainty about the economy's prospects. In other economic news, the Labor Department reported relatively tame consumer price inflation. Excluding volatile food and energy costs, the core consumer price index edged up 0.2 percent in September, in line with analyst projections. That could give the Federal Reserve room to cut interest rates again this year after the central bank slashed rates in September to stimulate sluggish business growth. The Fed next meets Oct. 30-31. High oil prices and a declining U.S. dollar helped lift precious metals modestly. Gold typically moves opposite the dollar as investors hedge against currency weakness; investors will also turn to precious metals to protect themselves from inflationary signals such as rising oil prices. Nymex December gold ended up 30 cents at $762.30 an ounce. Silver rose 9.2 cents to settle at $13.75 an ounce. The euro bought $1.4188 late Wednesday. It traded at a peak $1.4282 on Oct. 1. Elsewhere, agriculture futures finished lower on the Chicago Board of Trade. December corn dipped 2.5 cents to $3.58 a bushel. November soybeans fell 3.25 cents to $9.7425 a bushel. Wheat for December delivery fell 8 cents to $8.205 a bushel.
