Continuing commodity crisis weighs on FTSE

Commodities continued to tumble today on the back of global growth concerns, with oil and silver plunging to their lowest levels since March.

Downbeat US employment data, gloomy manufacturing data in Europe and fears over further monetary tightening in China have created a toxic mix triggering a dramatic commodities sell-off.

According to Bloomberg, the S&P GSCI index of 24 commodities fell 1.7% in morning trading in New York, with oil falling 2.3% and silver tumbling 7%.

The 19-commodity Reuters-Jefferies CRB index fell 5% yesterday, marking its fifth biggest one-day fall on record.

Silver, which saw its biggest one-day drop in more than thirty years yesterday, has now declined around 30% since last week.

The sell-off has impacted markets, with the FTSE 100 languishing in negative territory in mid-afternoon trading. London's leading index is 0.4% in the red, trading at 5948, with Royal Dutch Shell, down 2.5%, and Scottish & Southern Energy, down 2.2%, feeling the pinch from the commodity crisis.

Meanwhile, all eyes will be on the Dow after the US Bureau of Labor Statistics (BLS) announced non-farm payrolls added a better-than-expected 244,000 jobs in March. Yesterday, the index closed down more than 1% as global growth concerns spooked investors.

This week's sell-off has led some analysts to conclude the commodities bubble is bursting. The last few days mark a dramatic turnaround from last month when political turbulence in oil-rich North African and Middle Eastern nations resulted in oil prices surging to a two-and-a-half year high.

But amid the gloom, Reuters reports Goldman Sachs has predicted a new oil rally on the back of tightening demand.