Commodity companies fall as dollar strengthens, investors worry about global recovery

Commodity company shares lead broad decline

DENVER — Shares of companies that produce metals, coal and oil led U.S. markets in a broad decline, as the dollar rose and concern about the global economy intensified.

The dollar hit the highest level against the euro in more than eight months Thursday because of mounting concerns about European jobs and debt levels in countries such as Portugal, Spain and Greece.

That pressured commodities, which are priced in dollars, because they become more expensive for foreign buyers.

“When there is a sharp decline in commodities prices or metals prices, you also tend to see a decline in stock prices of mining and metals companies,” said CPM Group analyst Carlos Sanchez in New York. “Sometimes the decline is more pronounced because of the higher risk associated with mining companies.”

Energy shares as measured by the Standard & Poor’s 500 index led the market lower Thursday. Materials stocks, pushed lower by shares of metals companies, logged the second-biggest decline, according to FactSet.

Crude oil fell $3.84 to settle at $73.14 a barrel on the New York Mercantile Exchange. It was the biggest one-day drop in four months.

In addition, many investors remain concerned about whether the Chinese economy is slowing and how that will affect the global economy. China has taken steps to tighten its lending standards and control inflation.

China has strong demand for commodities, with imports of refined metals up 126 percent in 2009, according to Barclays Capital.

“Despite China growing at a strong pace, there is some expectation that problems are looming and that they may have overcapacity across the range of their industries,” Sanchez said.

In the U.S., claims for unemployment benefits rose unexpectedly by 8,000 to 480,000 last week, the Labor Department reported, the fourth increase in the past five weeks.

That data and rising debt levels in European nations sent the Dow Jones industrial average down 268 points or 2.6 percent. The S&P 500 lost 34 points or 3.1 percent.

Shares of Barrick Gold Corp. fell $1.91, or 5.3 percent, to close at $34; Newmont Mining Corp. closed down $2.33, or 5.1 percent, at $43.54; and Freeport-McMoRan Copper & Gold Inc. declined $3.72, or 5.3 percent, to close at $66.74.

Among coal-mining companies Massey Energy Co. fell $3.39, or 8 percent, to close at $39.21; Arch Coal Inc. gave up $1.17, or 5,3 percent, to close at $20.88; and Alpha Natural Resources fell $3.37, or 7.8 percent, to $39.69.

Oil companies gave up ground as well. Shares of Chevron Corp. fell $1.84, or 2.5 percent, to close at $71.37; Exxon Mobil Corp. was down $1.88, or 2.8 percent, to close at $64.72; and Marathon Oil Corp. declined $1.51, or 5 percent, to close at $28.86.

Alcoa Inc. shares lost 58 cents, or 4.3 percent, to close at $12.91; United States Steel Corp. declined $2.75, or 5.9 percent, to close at $44.07; and Nucor Corp. was down $2.44, or 5.8 percent, to close at $39.50.