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Commodities Advance

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"The outlook for increased demand from emerging markets prompted speculation that this month's decline was excessive."

Bloomberg, Kim Kyoungwha and Glenys Sim

Commodities rose for the first day in three as the outlook for increased demand from emerging markets prompted speculation that this month's decline was excessive.

The Standard & Poor's GSCI Index of 24 raw materials gained as much as 1.6 percent, the most since May 9, and was up 1.3% at 681.76 by 11:32 a.m. London time. It fell 11% this month before today after touching the highest level since 2008 on April 11. Zinc added as much as 3.7% in London trading, and raw sugar rose as much as 3.8% in New York.

Investment spending in emerging markets is outpacing expenditures in developed economies for the first time as a surge in infrastructure supports global growth and profits. Bulls say economic expansion, led by China, India and Brazil, is raising demand at a time when producers from mining industry leader BHP Billiton Ltd. to oil company BP Plc can't keep up.

"We still see strong demand from emerging economies" for raw materials including oil, said Ong Yi Ling, a Singapore-based investment strategist at Phillip Futures Pte. "Some investors are returning to the markets."

International Monetary Fund data show investment will top 24% of global gross domestic product in 2012, the most in more than two decades. Michael Saunders, Citigroup Inc.'s chief European economist, has calculated that developing nations will probably secure the largest share of it this year.

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