Gasoline, silver and corn drove commodities to their biggest weekly decline in more than five decades on concern that a $US700 billion ($900 billion) financial rescue plan won't prevent a US recession, dragging down global demand.

Futures measured by the Reuters/Jefferies CRB Index of 19 raw materials tumbled 10% this week, the most since at least 1956. President George W. Bush signed a financial-company rescue bill into law today in a bid to stave off a US recession as manufacturing weakened and the Labor Department said employers cut the most jobs in five years in September. Crude oil fell.

``Panic, risk aversion and liquidation of contracts are characterizing the oil market as well as many other markets at the moment,'' said Thina Saltvedt, a Nordea Bank AB analyst in Oslo. ``Prices are not only being set by fundamentals, but fears of how crises in the financial sector may spread to other parts of the economy.''

Crude oil slid 12% this week, the most since December 2004. The contract for November delivery slipped 9 cents, or 0.1%, to settle at $US93.88 a barrel on the New York Mercantile Exchange, after touching $US91.30 earlier, the lowest in two weeks. The price fell later in the day.

The UBS Bloomberg Constant Maturity Commodity Index of 26 raw materials fell 10%, the most ever, amid skepticism that the financial rescue plan won't do enough to stimulate economic growth and demand for commodities.

UBS AG, the European bank hardest hit by the credit crisis, said today it scaled down its commodities business and cut jobs, retaining only the precious-metals operations, the commodity indexing unit, and exchange-traded commodity derivatives trade.

`Demand destruction'

``If global equity markets continue to trend lower, they should remain the overwhelming force and most commodities are likely to suffer as demand destruction and economic contraction become paramount,'' Michael McGlone, a director in commodity indexing at Standard & Poor's in New York, said today in a report.

Copper rose in New York, capping five straight declining sessions, while it still fell 13% for the week, the worst slide since at least 1988. Futures for December delivery climbed 6.25 cents, or 2.4%, to $US2.69 a pound on the Comex division of the Mercantile Exchange.

``There are three commodities I watch for weakness: steel, iron ore and copper and all continue to weaken,'' said Daniel Brebner, executive director of commodity research at UBS AG in London. ``The news flow is likely to continue to push those commodities in the same direction over the near term.''

Employers eliminated 159,000 jobs last month, the Labor Department said, 51% more than the median 105,000 forecast by economists in a Bloomberg News survey. The jobless rate held at a five-year high of 6.1%, matching forecasts.

Commodities `under pressure'

A ``very weak'' non-farm payrolls number could see commodities ``remain under pressure,'' Walter de Wet, a Standard Bank Group Ltd. analyst in Johannesburg, said in an e-mailed comment late yesterday.

Commodities also fell as the euro slumped 5.8% against the dollar, the biggest one-week drop since the 15- nation currency was created in 1999, on signs that Europe's economy is slowing. Manufacturing contracted in the U.K. at the fastest pace in 16 years last month, while European retail sales fell an annual 1.8% rate in August and France slipped into a recession in the third quarter, the first in 15 years.

Under the rescue law signed by President Bush today, companies can sell illiquid assets to the government. The plan was designed to unclog credit markets rocked by record home foreclosures and to contain the spreading financial crisis.

Gasoline futures for November delivery fell 2.67 cents, or 1.2%, to settle at $US2.2283 a gallon in New York, capping a 16% plunge for the week, the most since at least 2005.

Silver futures for December delivery rose 20 cents, or 1.8%, to $US11.32 an ounce in New York, rebounding from a 13% drop yesterday. The metal still fell 16% for the week, the most since March.

Corn futures for December delivery were unchanged at $US4.54 on the Chicago Board of Trade. Most-active futures fell 16% for the week, the most since June 1986.

Bloomberg News