MUMBAI: Risk averse investors continued to stay on the sideline which has affected trading activity on the commodity bourses.

Crude oil, gold futures were moving in narrow band as concerns on European region rising deficit destabilized market sentiment.

Resurgence in industrial metal, however, has bought some cheers back to markets. Meanwhile, the US dollar continuing to strengthen against euro – the US dollar rose to eight month high vs. euro – kept commodity prices under check.

Strength in the US dollar often reflects risk tolerance of investors and also makes US dollar-priced commodities more expensive for holders of other currencies.

US crude prices reversed some of last week's losses and rose toward $72 a barrel on Monday, supported by a technical rebound and as a powerful storm across the mid-Atlantic boosted hopes of increased fuel demand.

US crude for March delivery rose 26 cents to $71.45 a barrel. The contract settled down $1.95 at a seven-week low of $71.19 per barrel on Friday, after earlier hitting a session low of $69.50.

Outside market factors are looking to support crude oil prices. A powerful storm slammed the mid-Atlantic on Friday, threatening record snowfall in a region heavily dependent on home heating oil and natural gas supplies.

Meanwhile, unions have called an open-ended strike at Total SA's French refineries on February 17 to try to obtain a commitment by the oil group not to close down its Dunkirk refinery in northern.

A Nigerian militant group said on Sunday it had attacked a Royal Dutch Shell oil pipeline in the Niger Delta but the Anglo-Dutch company said it had no reports of any such sabotage.

Money managers cut their net long crude oil futures position on the New York Mercantile Exchange in the week through February 2, the Commodity Futures Trading Commission said on Friday.

Gold prices steadied this morning after falling to a three-month low late last week, when investors became risk-averse amid worries about the euro zone's fiscal stability and sold off commodities, including gold.

Spot gold inched up 0.1% to $1,066.00 per ounce, compared with New York’s notional close of $1,065.55.

US gold futures for April delivery were up 1.4% at $1,067.40 per ounce. On Friday, the contract fell $10.20 to $1,052.80 on the COMEX division of NYMEX. Spot gold fell as low as $1,043.75 on Friday.

The world's largest gold-backed exchange-traded fund, SPDR Gold Trust, rose 1.83 tonnes to 1,106.38 tonnes on Friday. It was the first rise in the holdings since late December.

Base metal counters such as copper and zinc jumped in early trade on Monday, dragging their Shanghai counterparts higher after last week's heavy selling.

LME copper rallied as much as 3.2% to $6,468.25, while zinc rallied almost 5%, helping to pare last week's 6.9% and 8.1% declines on a combination of profit taking by short position holders and bargain hunters.

Benchmark third-month Shanghai copper rose as much as 2.6%, while zinc rallied almost 2%. On Friday, LME copper fell to $6,225, its lowest in more than three months. When Shanghai closed on Friday, LME copper stood at $6,362, implying a fall at the open of around 1%.

Copper's weakness at the hands of a stronger US dollar and worries about global growth was blunted by a surprise drop in unemployment, but data from the Commodity Futures Trading Commission showed a 36% drop in net length in non-commercial positions.

Economic worries persist. Despite the fall in unemployment, non-farm payrolls showed a bigger-than-expected fall in January while the parlous state of the economies of and continue to crimp appetite for risk.

The domestic commodity maintained steady trend as softer rupee supported prices higher. However, negative global cues drove prices of crude oil futures lower.

On MCX, crude oil contract for near-month settlement was last quoting 0.7% lower at Rs 3,352 a barrel, not far from its early low of Rs 3,342. The contract started the session at Rs 3,362.

MCX Gold for February settlement opened weak at Rs 16,265 per 10 gram. The counter kept sliding lower as weak sentiment played heavily on the markets.

It was last quoting at Rs 16,263 per 10 grams. MCX Silver March settlement contract traded 0.6% lower at Rs 24,163 per kg, after having opened the session at Rs 24,325.

Base metal counters bounced back into positive zone tracking gains in Shanghai.

Copper traded in the narrow band amid positive undertone.

MCX copper for February settlement traded 0.2% higher at Rs 300.65 per kg. MCX zinc February contract race higher at the opening bell and was last quoting 1.5% higher at Rs 94.95 a kg.