Markets Rebound As US Aid For Economy Beckons

Prices also rallied on market positioning ahead of Monday`s U.S. holiday for Martin Luther King Day, traders said.

Commodities were mostly up on Friday, after the sell-off in the previous session, as investors reacted to U.S. government efforts to get a stalled economy moving with billions of dollars in new aid.

Prices also rallied on market positioning ahead of Monday's U.S. holiday for Martin Luther King Day, traders said.

Copper, one of the world's most economically sensitive raw materials, settled up 5 percent in New York, after losing more than 3 percent in Thursday's session. Gold futures also rallied, ending 4 percent higher.

On the agricultural side, U.S. soybean futures kept up a sizzling rally seen through most of this week on worries about dry weather in South America's key soy-growing regions that could squeeze this year's harvest.

Even oil, which started on a weak note after a sharp drop in this year's demand forecast by the International Energy Agency, reversed tack to end higher.

Analysts said investors seemed largely inspired by the freeing up of some $350 billion in new money that the Obama administration, which takes office next week, could use in its battle to help revive the U.S. economy.

Washington also approved on Thursday about $400 billion in direct aid and guarantee for troubled financial institutions, such as Bank of America and Citigroup.

"These are staggering efforts, and there are equally big numbers behind each of them," said Edward Meir, an energy and metals analyst at MF Global. "They could make markets breathe somewhat easier in the days ahead, as investors start to appreciate the government's role as a backstop to the critical banking system."

Copper for three-months delivery on the London Metal Exchange rose $170 to a session high of $3,445 a tonne, before closing up $80 at $3,355.

In U.S. trade, copper futures for March delivery settled up 7.40 cents at $1.5275 a lb on the COMEX metals division of the New York Mercantile Exchange.

Copper, a key raw material to the power and construction industries, has fallen 60 percent in value since hitting record highs of nearly $9,000 a tonne on the LME and over $4 a lb on COMEX in July.

In precious metals, COMEX gold snapped four straight days of losses when the most-active February contract spiked 4 percent, or $32.60, to close at $839.90 an ounce.

U.S. soybean futures rose more than 2 percent, pulling corn and wheat prices higher.

March soybean futures contract on the Chicago Board of Trade settled up 25-1/2 cents at $10.20 a bushel.

On the energy front, U.S. crude oil futures settled up 3.1 percent, or $1.11, at $36.51 a barrel.