By Glenys Sim Oct. 28 (Bloomberg) -- Copper fell below $4,000 a metric ton as the ongoing slump in stock markets increased concern a global recession will sap demand. The metal used in wires and pipes plunged by the daily limit for a fifth day in Shanghai. Copper is down 39 percent this month as the credit crisis worsened and the dollar rose to a 2 1/2-year high against the euro. The metal gained yesterday after better-than-expected new home sales data in the U.S., the world's second-largest user after China. ``Although this is positive data in a sea of negative news, we maintain that it is too early to call this the bottom for the U.S. housing market,'' Walter de Wet, an analyst at Standard Bank Ltd. in Johannesburg, wrote in an e-mail today. The metal for delivery in three months fell as much as 4.9 percent to $3,825 a metric ton, and traded at $3,860 a ton on the London Metal Exchange at 10:30 a.m. Singapore time. Copper is down 57 percent from its record high $8,940 in July, and has declined 42 percent for the year. The metal rose 6.6 percent yesterday after a report that showed U.S. home purchases rose to an annual rate of 464,000, compared with 450,000 forecast by economists. ``What we saw yesterday was just a relief rally after the massive declines we've seen of late, helped by a bout of short covering,'' Li Jingyuan, an analyst at Haifu Futures Co. said today from Shanghai. ``The stock markets haven't stopped tumbling and sentiment is poor.'' Asian stocks fell for a fifth day on concern the widening financial crisis and slowing economic growth will hurt company profits. Shanghai Copper Copper for January delivery on the Shanghai Futures Exchange dropped by 1,630 yuan, or 5 percent, from the previous settlement price, to 30,910 yuan ($4,518) a metric ton. This is the lowest for a most-active contract since June 2005. ``All eyes will be on the U.S. Fed from tomorrow as they decide on the next interest rate cut in the U.S.,'' said de Wet. ``This could provide some support to the markets.'' The Fed's Open Market Committee will probably reduce the benchmark federal funds rate by half a point next week to 1 percent, the lowest since May 2004, according to a Bloomberg survey of 64 economists. Among other LME-traded metals, aluminum fell 1.9 percent to $2,000 a ton, zinc declined 6.2 percent to $1,112, lead lost 2.3 percent to $1,265, nickel was 3.6 percent lower at $10,700, and tin slipped 2.6 percent to $13,200 as of 10:27 a.m. in Singapore. To contact the reporter for this story: Glenys Sim in Singapore at gsim4@bloomberg.net

Source