Commodities led gains last year as stocks, bonds, the dollar and raw materials rose together for the time since 2005 after the global economic recovery proved resilient.

The Thomson Reuters/Jefferies CRB index of 19 raw materials gained 17 percent in 2010. The MSCI All Country World Index of stocks rose 13 percent with dividends reinvested. Global bonds returned 4.7 percent as of Dec. 30, based on Bank of America Merrill Lynch’s Global Broad Market Index. The U.S. Dollar Index, a gauge against six counterparts, added 1.5 percent. The CRB outpaced the other measures for the first time since 2007.

Investors snapped up raw materials as China’s growth, the fastest of any major economy, spurred record demand for sugar and soybeans and rising imports of copper. Financial assets were also bolstered by low global interest rates and as the Federal Reserve pumped $600 billion in the U.S. economy, the world’s largest.

“We had support from fiscal and monetary policy that propped up prices of most asset classes,” said Walter “Bucky” Hellwig, who helps oversee $17 billion at BB&T Wealth Management in Birmingham, Alabama. “There is also more certainty that we will not hit the double dip, and that created fundamental demand.”

Commodity prices beat gains in stocks, bonds and the dollar last year as China, the biggest user of everything from cotton to copper to soybeans, led the recovery from the first global recession since World War II. At the same time, crops were ruined by Russia’s worst drought in at least a half century, flooding in Canada and parched fields in Kazakhstan, Europe and South America.

‘Incredibly Strong’

“This year has been incredibly strong,” said Nic Johnson, who helps manage about $24 billion in commodities at Pacific Investment Management Co. in Newport Beach, California. “You’ve had strong growth from China that put a bid into copper, and global crop problems cause huge rallies.”

Gains in the CRB were led by cotton, which surged 92 percent last year, reaching a record Dec. 21, on speculation that supply would fail to keep pace with rising demand in China. Silver, the precious metal most used in industry, jumped 84 percent as it attracted investors betting on both faster and slower economic growth. Corn added 52 percent and coffee climbed to a 13-year high as inventories shrunk and bad weather threatened crops in South America.

10 Percent Growth

China’s economy expanded more than 10 percent last year, according the median of 18 economists’ estimates compiled by Bloomberg. While growth will slow to 9 percent this year, that will still be three times the rate of the U.S. and six the times the speed of the euro region, based on Bloomberg surveys of as many as 69 economists.

“There is no doubt that demand is coming from China, and there are other emerging markets where demand grew,” said James Paulsen, who oversees $350 billion as the chief investment strategist at Minneapolis-based Wells Capital Management. “Commodities have gone up because the economy was gearing up. It became a sustainable global economic recovery.”

Raw materials rebounded in the last two quarters, with the CRB surging 29 percent since June 30. That’s the best second- half performance since the index debuted in late 1956. In the first six months, the gauge lost 8.8 percent.

Seventeen of 19 commodities tracked by the CRB rose last year. Natural gas lost 21 percent and cocoa fell 7.7 percent.

December Rally

In December, the commodity gauge jumped 10 percent. That compares with a 7.3 percent advance for the MSCI All Country World Index and a 0.7 percent drop for bonds. The U.S. Dollar Index lost 2.1 percent. The Standard & Poor’s 500 Index added 6.7 percent with dividends reinvested, and returned 15 percent in 2010.

Returns for commodity investors may be lower than the spot CRB index suggests. The S&P GSCI Total Return Index, tracking the net amount received, rose 9 percent last year. When longer- dated contracts cost more than those for immediate delivery, a market structure known as contango, investors pay a premium to maintain their holdings as positions expire.

Stocks overcame the worst financial crisis since the 1930s as corporate profits exceeded estimates and central banks kept interest rates near record lows. Boeing Co., Home Depot Inc. and General Electric Co. beat earnings estimates for at least the past four quarters.

Unprecedented Action

Governments have taken unprecedented measures to spur growth and boost confidence, as concerns the debt crisis in Europe would derail the global recovery pushed the MSCI All World Index to a low of 262.64 on May 25. The index posted back- to-back monthly gains in September and October and capped the biggest December rally since 1999.

The MSCI All World Index of developed and emerging stocks reached 330.9 on Dec. 29, the highest since Sept. 2, 2008, before the collapse of Lehman Brothers Holdings Inc.

“It’s good to be crossing the finish line with honorable returns,” said Lawrence Creatura, a Rochester, New York-based fund manager at Federated Investors Inc., which oversees about $340 billion. “The double dip did not occur. The unemployment situation in the U.S., while not improving, did not deteriorate further. Globally, Europe was able to prevent a worst-case scenario.”

U.S. Treasuries, benchmarks for borrowing costs around the world, returned 5.5 percent last year as of Dec. 30, rebounding from a 3.7 percent loss in 2009, Bank of America figures show.

$600 Billion

Bonds rallied from January through August as the U.S. economy threatened to slide back into a recession. They trimmed gains in the last four months of the year, sliding as Fed Ben S. Bernanke implemented a plan in November to pump $600 billion into the market.

As of Dec. 30, Japanese bonds, the biggest debt market, returned 2.4 percent in 2010 as the central bank cut its benchmark interest rate to “virtually zero.” The rally was more than double the 0.9 percent gain in 2009, based on the Bank of America data.

Greece and Ireland, which sought financial bailouts this year, had the worst-performing bonds among the 26 sovereign markets compiled by the European Federation of Financial Analysts Societies and Bloomberg.

Corporate bonds worldwide returned 7.12 percent last year as of Dec. 30, compared with 16.3 percent in 2009, according to Bank of America Merrill Lynch’s Global Broad Market Corporate Index. The debt has lost 0.82 percent in December, following a 1 percent drop in November. The securities are poised for the biggest quarterly decline since the three months ended September 2008.

Extra Yield

The extra yield investors demand to own corporate bonds instead of government debt has declined to 169 basis points, or 1.69 percentage points, from 176 basis points on Dec. 31, 2009, the index data show. Spreads narrowed this month from 177 basis points on Nov. 30.

“Economies are up and some of the darkest fears of the pessimists did not come to fruition,” Creatura said. “The U.S. and global economies, while they’re not firing on all cylinders, are moving forward.”