COMMODITIES-Oil, metals crumple on US jobs data; grain rally stalls
* U.S. jobs report fuels worries about global economy
* CRB index drops 2.2 pct, biggest daily decline since Dec
* Oil lead sell-off as Norway expected to end strike
* Grains end three-week drought-induced rally
* Copper falls 2 pct, gold off more than 1 pct (Updates throughout)
NEW YORK, July 6 (Reuters) - Commodities tumbled on Friday by their most this year, eroding their second successive weekly gain after dismal U.S. jobs data fueled worries about the global economy and raw materials demand.
Profit-taking in grain markets halted a three-week, drought-fueled rally that had driven corn prices up more than a third, while oil erased the week's gains, partly on hope that weekend talks between Norway's oil industry and striking oil and gas workers might avert a complete halt in production.
U.S. data showed non-farm payrolls expanded by only 80,000 jobs in June, weaker than forecast and the third straight month that fewer than 100,000 jobs were created. The unemployment rate remained at 8.2 percent. The dollar rallied and U.S. stocks fell, a recipe for selling raw materials.
The Thomson Reuters-Jefferies CRB index fell 2.2 percent to 286.92, the biggest one-day decline since December, knocking down the weekly gain to just under 1 percent. The loss curbed one of the biggest, broad-based commodities rallies on record; from June 29 until Thursday, the CRB was up nearly 8 percent.
Most commodities began to fall early, a day after the European and Chinese central banks trimmed rates and Britain's bank extended a bond-buying scheme. Those measures sparked worry among many investors that the global economy was deteriorating rather than hope for quicker economic growth.
Analysts called the U.S. jobs report a worst-case scenario for commodity bulls, showing the economy is weak but not yet weak enough to prompt the Federal Reserve to unleash a third round of quantitative easing, or QE3.
"Overall, it was another lackluster report but should not change forecasts for Fed action in any meaningful way," said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington D.C.
"While it is not enough to increase calls for QE3, it was also not enough to take QE3 off the table. We are still in data-watching mode in the U.S. in terms of Fed policy."
Markets are likely to look inward for direction next week, with a host of fundamental figures from trade data in China to a monthly U.S. crop report likely driving sentiment.
Oil fell sharply as investors not only worried about the U.S. economy but priced in higher supplies after Norway's government asked oil companies and union representatives to resume mediated talks on Saturday to avert a total shutdown of oil and gas output by western Europe's biggest producer.
Brent crude tumbled after reaching a one-month peak above $102 per barrel on Thursday. August Brent fell $2.51 or 2.5 percent, to close at $98.19 a barrel, cutting the week's gains to 39 cents.
Benchmark copper on the London Metal Exchange was last bid at $7,530 per tonne, down 2.2 percent from Thursday, when a surprise rate cut in China sparked new fears about fundamentals of the world's fastest-growing commodity consumer.
"The rate cut in China raised concerns that a string of economic data that will be published next week might be significantly weaker than previously expected," Daniel Briesemann, an analyst at Commerzbank said.
Gold was also swept lower in the aftermath of the U.S. jobs report as investors turned to the perceived safety of the greenback. The dollar index rose 0.6 percent, taking this week's gains to more than 2 percent, the most this year.
Spot gold initially rallied in response to the report, touching a session high of $1,609.39 an ounce on the view that the poor number would pile pressure on the Federal Reserve to ease monetary policy further.
The metal then turned negative, falling 1.3 percent to $1,583 an ounce as the dollar's rally a five-week high against the euro reduced gold's appeal as an alternative asset.
GRAINS RALLY PAUSES
Grains, which had bucked a weaker trend on Thursday, took a pause from a sizzling rally over the past three weeks fueled by a severe drought in the U.S. Midwest. Weather forecasts offered scant relief from the heat and only marginal rains.
New crop December corn slid 2.3 percent to $6.92 a bushel, while September wheat dropped 3.8 percent to $8.06 a bushel. Despite the losses, corn was still up more than a third over the past three weeks.
With the crop now entering the peak period of pollination, when heat can severely diminish its ability to put kernels on each ear, few analysts expected the price relief to last.
"It's a temporary setback as we wait for weather, for moisture," said Rich Nelson, analyst at Allendale Inc. Prices at 3:44 p.m. EST (1944 GMT)
LAST/ NET PCT YTD
CLOSE CHG CHG CHG US crude 84.16 -3.06 -3.5% -14.8% Brent crude 97.86 -2.84 -2.8% -8.9% Natural gas 2.776 -0.169 -5.7% -7.1% US gold 1580.00 -30.50 -1.9% 0.8% Gold 1582.66 -21.67 -1.4% 1.2% US Copper 340.95 -8.35 -2.4% -0.8%
Dollar 83.334 0.520 0.6% 3.9% CRB 286.920 -6.340 -2.2% -6.0% US corn 693.00 -15.50 -2.2% 7.2% US soybeans 1532.00 -19.50 -1.3% 27.8% US wheat 821.75 -25.25 -3.0% 25.9% US Coffee 176.45 -3.90 -2.2% -22.7% US Cocoa 2252.00 -76.00 -3.3% 6.8% US Sugar 22.46 0.29 1.3% -3.3% US silver 26.920 -0.752 -2.7% -3.6% US platinum 1448.50 -28.20 -1.9% 3.1% US palladium 580.35 -5.40 -0.9% -11.6% (Reporting by Eric Onstad in London and Jonathan Leff in New York; Editing by David Gregorio)
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