Commodity markets suffered a hefty sell-off on Wednesday as funds reduced risk, liquidated positions and moved into the safety of cash as a precautionary measure following the demise of Bear Stearns.

Gold plunged 5.9 per cent to $943.40 a troy ounce, its worst one-day fall for almost 18 years after US regulators took steps to support the property market by easing capital requirements for Fannie May and Freddie Mac, the housing finance agencies.