commodities bull run to resume in h2 2007

Commodities bull run to resume in H2 2007 -UBS
Mon Dec 4, 8:58 AM



LONDON (Reuters) - The commodities bull run will resume in the second half of next year as economic and demand growth pick up speed, UBS Wealth Management said on Monday.

But weak demand in the first half will cap commodity price gains in the first half of next year, the Swiss-based money manager said in a release.


"A growth slowdown in the U.S. and Europe suggests weaker demand for commodities in 2007 from these regions," UBS said.


"The relatively strong growth we foresee in China and elsewhere in Asia should prevent global demand from declining as much as in previous cycles."


But, UBS expects the U.S. Federal Reserve to cut interest rates in the United States and stimulate growth and demand for commodities in the second half of 2007.


The wealth manager stressed that investments in the sector should be seen as a long-term commitment.


"Precisely timing a given entry point and exit point in commodities is difficult given their high volatility and many unpredictable market drivers such as geopolitical risk," it said.


"It seems inadvisable for investors to turn their backs on commodities as an asset class despite the potential for short-term shocks."


UBS Wealth Management is part of Swiss-based banking group UBS