London, March 13 - Raw sugar, cocoa and coffee futures rose on Friday with funds showing renewed appetite for commodities as equity markets rallied, arousing suggestions that inflation may return, dealers said.
"Generally there seems to be a feeling that funds are looking at commodities again as a hedge against inflation," one dealer said.
May raw sugar futures on ICE rose 0.06 cent at 13.15 cents a lb by 1318 GMT with the contract rebounding strongly after dipping to 12.42 cents on Monday, its lowest level since late January.
"I get the feeling that they (funds) have renewed confidence (in soft commodities) and sugar seems to be the attractive one for them. People are also talking India numbers down again," one dealer said.
Sugar prices have been boosted by diminished production prospects in India and talk of substantial imports of whites over the next few months.
May whites in London peaked at $405.00 per tonne on Friday, its highest level for 5-1/2 months before slipping back to $402.30, off $0.70.
"You've seen the whites (over raws) premium jump $15 and I think it may have risen too quickly," one dealer said.
COFFEE'S MORE BULLISH MOOD
Coffee futures also rose with May arabicas on ICE up 0.80 cent at $1.135 per lb.
Dealers said the market's strong rebound on Thursday had created a more bullish mood after prices had looked poised test support at the bottom of its recent range.
May dipped to a low of $1.0445 on Thursday, only marginally above its contract low of $1.0435, before rallying on fund shortcovering to end sharply higher at $1.1055.
"Coffee was part of a big fund attraction (for commodities). I think New York needs to get through $1.12 (on May) to really change the picture," one dealer said.
The Reuters-Jefferies CRB index, a widely watched commodity benchmark, was up 1.05 at 212.86 on Friday. It has now risen 4.6 percent from Wednesday's finish of 203.50.
Dealers said the rise in arabica coffee had been largely short covering by funds although some may be beginning to establish long positions.
May robusta futures in London were up $26 at $1,556 a tonne.
Cocoa futures also rose with May futures on ICE up $87 at $2,427 a tonne and May cocoa in London up 10 pounds at 1,888 pounds a tonne.
Dealers noted the comparative strength of gains in New York partly reflected its earlier settlement on Thursday. Prices rose sharply in post-settlement trade.
The strength of sterling also helped to keep a lid on London prices.
Sterling rallied against the dollar on Friday, lifted by positive sentiment in European stock markets as investors lowered their guard towards riskier assets.