French wheat prices closed at fresh contract highs as buoyant US markets jumped on more fears that dry weather would damage crops and as the dollar firmed against the euro.
Traders said that against the background of a smaller, drought-hit crop in Europe there continued to be good intra-European Union demand for wheat, even if the export market was slack.
Prices were edging higher as a result, especially as sellers were reluctant, they said.
In Chicago, wheat futures hit new highs, with corn and soybean markets rallying on the back of a hot, dry weekend in the western Corn Belt. There were also concerns over dryness in the Northern Plains.
At Euronext, the Paris-traded November contract was €1.50 up at a new high of €127.50 a tonne by Monday's close.
The euro slipped around one per cent against the dollar amid optimism over the US economic recovery, improving French wheat's competitiveness on world markets.
Meanwhile in London, traders said soaring Euronext milling wheat futures helped trigger gains in wheat prices on the LIFFE futures exchange.
Benchmark November wheat settled a hefty £1.75 a tonne higher at £88.65.
"US and French strength helped to ramp up London prices, particularly on the new crop (November-March 2004), which has seen massive increases of up to £2.50 a tonne," a trader said.
Gold fell in Europe on Monday as a resurgent dollar and relief that the electricity in New York City was back, after North America's worst power failure, dulled bullion's safe-haven sparkle.
After trading quietly on Friday, bullion slid as the dollar clambered to its highest level in over two weeks against the euro following last week's better-than-expected US economic data.
Spot gold ended European trading at $358.20 a troy ounce, down from $363.20 last quoted in New York on Friday. Bullion earlier dipped to a session low of $357.40.
Dealers said further losses could be in the pipeline, with added pressure from wary speculators holding large positions on the US futures market.
Positive sentiment towards the dollar was seen continuing ahead of a consumer confidence report yesterday from the University of Michigan, against a backdrop of buoyant US stocks.
Last week's blackout failed to spark panic buying of spot gold - considered a good bet in times of economic and political trouble - after the authorities issued assurances that the massive power grid failure was not caused by any attack.
But analysts said that overall the market still had appeal. Wariness over the robustness of US stock markets was seen as being to gold's advantage later this year.
London cocoa futures rallied as a robust technical chart picture encouraged speculative buying, sending prices to a one-month high.
The benchark London December futures contract closed £15 pounds up at £985 a tonne, having touched a one-month high at £1,003 earlier in the session.
Dealer said prices should remain in a broad range between 900 and £1,060 a tonne, as the market awaited further crop developments from the coming 2003/04 main crops from West Africa, which should produce the first pods in September.
Though dealers generally said it was too early to have firm information about the harvest, market talk circulated about cocoa trees in Invory Coast holding a good number of pods.
But many of these are small and have a questionable survival rate, given the recent dry weather in the world's top producer.