LONDON  - Global commodity prices mostly fell this week as traders took their cue from mounting worries over the Chinese economy, which is a crucial consumer of many raw materials and where data showed China’s country’s manufacturing activity contracted to an 11-month low in July.

OIL: World oil prices were shaken by stubborn Chinese demand concerns.

HSBC said in a survey Wednesday that its preliminary purchasing managers’ index (PMI) hit 47.7 this month, down from a final 48.2 in June and the lowest since August. A reading below 50 indicates contraction, while anything above signals expansion.  “Weak Chinese PMI data for July weighed on oil prices,” said Lucy Sidebotham, an analyst at energy consultancy Inenco.

“With orders faltering and the suggestion that the economy is still losing momentum, there were renewed concerns over demand growth from the world’s second-biggest oil consumer.

“However, the overall global outlook looks positive following recent economic data from the US and eurozone, and falling US stockpiles.”

The PMI tracks manufacturing activity in China’s factories and workshops and is a closely watched gauge of the health of the economy. “The China factor is important and there’s just more and more data showing that the economy is slowing,” added Victor Shum, managing director at consultancy IHS Purvin and Gertz.

“China is expected to account for a majority of oil demand going forward and with a slowing Chinese economy, gains in oil futures will be limited.

“At this point, oil futures are overvalued so we are seeing downside risks.”

China’s economy has been weakening this year, with growth in the April-June period dipping to 7.5 per cent, from 7.7 per cent in the first quarter and 7.9 per cent in October-December.

“Front month WTI has experienced the most downside as ongoing concerns over Chinese growth prospects dim the longer term outlook for price support at current levels,” added Sucden analyst Kash Kamal.

By late Friday on London’s Intercontinental Exchange, Brent North Sea crude for delivery in September sank to $106.91 a barrel compared with $108.93 a week earlier.

On the New York Mercantile Exchange, West Texas Intermediate or light sweet crude for September dropped to $104.36 a barrel from $108.67 for the August contract a week earlier.

PRECIOUS METALS: Prices mainly rose, bucking the downward trend on most commodity markets. “The current rally in the gold price now suggests that investors are returning to the gold market,” said UniCredit analysts in a research note.

Back in June, gold had slumped close to a three-year low under $1,200 per ounce, hit by receding inflation fears, upbeat US data, a strong dollar and expectations of an end to the Federal Reserve’s quantitative easing (QE) stimulus.

By late Friday on the London Bullion Market, the price of gold climbed to $1,331 an ounce from $1,295.75 a week earlier.

Silver advanced to $20.02 an ounce from $19.42.

On the London Platinum and Palladium Market, platinum gained to $1,428 an ounce from $1,422.

Palladium decreased to $731 an ounce from $743.

BASE METALS: Base or industrial metal prices mostly fell after the poor Chinese data. “Metal prices find themselves under pressure across the board this morning, once again on the back of weak Chinese economic data,” said Commerzbank analysts.

They added: “HSBC’s July flash PMI for the manufacturing sector in China fell further to 47.7 points, putting it at its lowest level for eleven months.

“This points to a further cooling of the Chinese economy, which could have a negative impact on metal demand.”

By Friday on the London Metal Exchange, copper for delivery in three months dropped to $6,873 a tonne from $6,941 a week earlier.

Three-month aluminium dropped to $1,802.50 a tonne from $1,818.

Three-month lead firmed to $2,059 a tonne from $2,047.75.

Three-month tin slipped to $19,302 a tonne from $19,624.

Three-month nickel fell to $13,900 a tonne from $14,070.

Three-month zinc decreased to $1,862 a tonne from $1,865.

COCOA: Prices ran into profit-taking after striking eight-month highs.

By Friday on LIFFE, London’s futures exchange, cocoa for delivery in September sank to £1,592 a tonne from £1,619 a week earlier.

On New York’s NYBOT-ICE exchange, cocoa for September slid to $2,352 a tonne from $2,368.

COFFEE: The market fell once again as traders eyed the prospect of a record harvest this year in top producer Brazil.

“The focus has shifted once more to the prospect of a record crop for a low-yield year in Brazil ... which is likely to put further pressure on prices,” said Commerzbank analysts.

By Friday on NYBOT-ICE, Arabica for delivery in September declined to 123.75 US cents a pound from 129.15 cents a week earlier.

On LIFFE, Robusta for September decreased to $1,935 a tonne from $1,991.

SUGAR: The market pushed higher, having struck three-year lows the previous week on expectations of plentiful supplies from Brazil.

By Friday on NYBOT-ICE, the price of unrefined sugar for delivery in October grew to 16.42 US cents a pound from 16.28 cents a week earlier.

On LIFFE, the price of a tonne of white sugar for October gained to $480.80 from $465.30.

RUBBER: Prices edged higher despite demand concerns.

The Malaysian Rubber Board’s benchmark SMR20 inched up to 225.90 US cents a kilo from 224.40 cents the previous week.