Fresh initiatives by European leaders to tackle the Euro zone crisis have revived hopes and boosted the appetite for risky assets in global markets.

Few global commodities were seen extending the gains initially as markets expected further action by the leaders during the EU summit this week. 

Sustained fall in the value of the rupee remains the biggest cause for concern in the domestic markets.

Gold

Bullion declined, with spot gold shedding around one per cent following the slip of the euro.

The auction of Spanish short-term bills, which saw a rise in yields and low offtake, accentuated the trend. However, investors were closely watching the developments in the Euro zone for further directional cues. 

Tracking global markets, gold dropped at the Multi Commodity Exchange. However, enduring weakness in the rupee limited the fall, a report from Geojit Comtrade said.

Rupee created fresh record lows against the US dollar after breaching the Rs 55 a dollar mark. 

Base metals

Meanwhile, base metals at the London Metal Exchange were seen reversing the earlier gains by afternoon.

Copper pared gains while metals like lead were down around one per cent. However, moves by China to bolster the economic growth and hopes of solid measures by the EU to contain the debt crisis may cushion the fall. 

Crude 

Crude oil turned lower following an initial rise during the morning trades. The Organization for Economic Cooperation and Development’s trimming the economic growth forecast for Euro area aided the fall.

Expectation that Iran will soon reach an accord with the West over the nuclear issue also aided the sentiment. 

Meanwhile, crude oil inventories in the US were seen rising for the ninth consecutive session last week, which may probably build additional pressure over the oil market.  

Earlier, credit rating agency Fitch downgraded Japan’s long term rating to A+ with a negative outlook. All these factors added to the pressure on crude oil prices.

cj@thehindu.co.in

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