Crude oil, copper and gold advanced after an unexpected cut in the Federal Reserve's discount rate eased concerns that a credit crunch will slow economic growth and hurt demand for raw materials.

The Fed, in an unscheduled announcement today, reduced its discount interest rate by 0.5 percentage point to 5.75 percent and said it's prepared to take further actions to "mitigate'' damage to the economy from the rout in global credit markets.

"The Fed cut rates, and the stock market started to scream, and commodities followed,'' said Leonard Kaplan, president of Prospector Asset Management in Evanston, Illinois. He has traded precious metals for 34 years.

Crude oil for September delivery rose $1.11, or 1.6 percent, to $72.11 a barrel on the New York Mercantile Exchange as of 11:17 a.m. local time. Copper for delivery in three months advanced $205, or 3 percent, to $6,945 a metric ton on the London Metal Exchange. Gold advanced $6.24, or 1 percent, to $658.25 an ounce.

"There is a fear the credit crunch could lead to weaker demand for oil products, and this is trying to take some of the fear away,'' said Hannes Loacker, an analyst at Raiffeisen Zentralbank Oesterreich AG in Vienna.

Brent crude for October settlement climbed $1.20, or 1.7 percent, to $70.62 a barrel on London's ICE Futures Exchange.

Copper futures for December delivery rose 4.8 cents, or 1.6 percent, to $3.139 a pound on the Comex division of the New York Mercantile Exchange.

Today's rate cut is providing "confidence,'' said Mo Ahmadzadeh, president of metals trading at Mitsui Bussan Commodities Ltd. in New York, said by phone.

Index Gains

The Reuters/Jefferies CRB Commodity Price Index fell 3.4 percent to 301.27 yesterday, the biggest percentage drop since at least September 1956. The index was 1.2 percent higher today.

The slump will be ``short-lived'' because global economic growth will soften any slowdown in U.S. demand, Goldman Sachs Group Inc. said in a report yesterday.

Equity markets in the U.S. and Europe rallied after the Fed's cut. BHP Billiton Ltd., the world's largest mining company, rose as much as 9.9 percent in London, while Anglo American Plc jumped as much as 8.8 percent.

The gains in commodities may be short-lived, analysts including Prospector Asset Management's Kaplan said.

"This is a short-term fix and the only question is: how long will it last,'' he said. "In my opinion, it may last for two or three days,'' he added.

"It's only one step the Fed has taken here,'' said Wolfgang Wrzesniok-Rossbach, head of marketing and sales at Hanau, Germany-based Heraeus Metallhandels GmbH, which owns five precious-metal refineries. "We shouldn't count on a complete change in sentiment.''

Metals Advance

Among other metals traded on the LME, nickel gained $750 to $25,850 tons. Aluminum gained $25 to $2,495 a ton, lead rose $90 to $2,895 and zinc increased $74 to $3,064.

"Nothing changes with this,'' Rudolphe Roche, a commodities fund manager at Schroders Plc, said by phone from London today. "The picture is still bullish for commodities.''