Shares of companies that produce metals used in everything from construction to consumer products led U.S. markets lower Thursday, as the dollar rose and concerns grew about the strength of global demand.
The dollar hit the highest level against the euro in more than eight months Thursday because of mounting concerns about European jobs and debt levels in countries such as Portugal, Spain and Greece.
That pressured commodities, which are priced in dollars, because they become more expensive for foreign buyers.
"When there is a sharp decline in commodities prices or metals prices, you also tend to see a decline in stock prices of mining and metals companies," said CPM Group analyst Carlos Sanchez in New York. "Sometimes the decline is more pronounced because of the higher risk associated with mining companies."
In addition, many investors remain concerned about whether the Chinese economy is slowing and how that could affect the global economy. China has taken steps to tighten lending standards and keep inflation under control.
China has a robust demand for commodities, with imports of refined metals up 126 percent in 2009, according to Barclays Capital.
"Despite China growing at a strong pace, there is some expectation that problems are looming and that they may have overcapacity across the range of their industries," Sanchez said.
In the U.S., claims for unemployment benefits unexpectedly rose by 8,000 to 480,000 last week, the Labor Department reported, the fourth increase in the past five weeks.
The news sent the Dow Jones industrial average down over 200 points by mid-afternoon, while the S&P 500 fell by 26 points, or 2.4 percent.
Shares of Barrick Gold Corp. fell $1.68, or 4.7 percent, to $34.23; Newmont Mining Corp. was down $1.85, or 4 percent, to $44.02; and Freeport-McMoRan Copper & Gold Inc. declined $3.20, or 4.6 percent, to $67.26.
Coal mining companies also dropped. Massey Energy Co. fell $2.88, or 6.8 percent, to $39.72; Arch Coal Inc. was down 95 cents or 4.3 percent, at $21.10; and Alpha Natural Resources gave up $2.94, or 6.8 percent, at $40.12.
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