By Michael Taylor
LONDON, May 7 (Reuters) - Copper fell about 1 percent on
Friday as hefty sell-offs in global equities and persistent euro
zone debt worries dented sentiment.
Benchmark copper for three-month delivery CMCU3 on the
London Metal Exchange traded at $6,915 a tonne from $6,950 at
the close on Thursday and compared with a session low of $6,760.
Group of Seven finance ministers said they would discuss a
Greek bailout later on Friday after Federal Reserve officials
expressed concern and the White House said President Barack
Obama was watching developments closely. [ID:nSGE64608F]
"The fears persist -- this whole risk of contagion hasn't
been effectively nullified," said Robin Bhar, an analyst at
Credit Agricole. "The market is convinced that the worst-case
scenarios being pencilled in are probable."
"It's not a fundamentally-driven story at the moment -- it's
sheer panic and sheer uncertainty driving these things," he
added. "Things got ahead of themselves a few months ago and now
you could argue (prices) are at fundamentally justified levels."
The prospect of a hung parliament in the United Kingdom
after a bitterly fought general election added to uncertainty.
[nUKVOTES]
U.S. stocks fell 9 percent on Thursday as a suspected
trading glitch combined with fears of a new credit crisis in
Europe led some investors to recall the mayhem in world markets
after the collapse of U.S. bank Lehman Brothers in 2008. [.N]
"It's very volatile out there," said one LME trader. "After
last night on Wall Street, we were all expecting things to go
crazy this morning in metals but it didn't happen."
Copper, used in power and construction, fell to $6,632.75
earlier this week -- a level not seen since early February --
as a free-falling euro and intensifying fears of a chain
reaction in the euro zone debt crisis increased risk aversion.
A weak euro makes metals costlier for European investors.
"The world remains on high alert over the situation in
Greece and contagion fears," RBC Capital Markets said in a note.
"The recent riots and hysteria in Greece make the austerity
plans all the more difficult."
"In the U.S, it was another day of sell-offs," RBC analysts
added. "We are all hoping for uplifting news with the
unemployment data ... but of course any number might be
overshadowed by Greece and the EU bailout."
The U.S. Labour Department's April employment report is due
at 1230 GMT. [ECI/US]
Helping stem base metal losses, copper and aluminium stocks
in LME warehouses are falling, indicating physical demand for
the metals has not dried up.
Copper stocks at 490,875 tonnes are down about 60,000 tonnes
since the middle of February. <0#LME-STOCKS>
Aluminium stocks have fallen to 4.506 million tonnes, since
hitting a record high above 4.640 million tonnes in January.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
For a graphic on metal stocks, click:
here
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>A large portion of those aluminium stocks are tied up in
financial deals, to release cash for producers and to earn banks
higher returns than they would get in money markets.
[ID:nGEE5BA277]
Aluminium CMAL3, used in transport and packaging, traded
at $2,092.50 a tonne in LME rings versus $2,104.
Steel making ingredient nickel CMNI3 traded at $22,220 in
exchange rings from $22,000 while battery material lead CMPB3
was at $2,010 from $2,001.
Zinc CMZN3 was untraded in LME rings but last bid at
$2,080 a tonne from $2,115 and tin CMSN3 was traded at $17,650
from $17,700.
Analysts say funds are showing greater interest in both zinc
and lead as both metals had underperformed the LME complex this
year, falling around 18 percent respectively.
They added that a proposed new mining tax in mineral rich
Australia was also being keenly watched as possibly being
negative for output but bullish for prices. nAUTAX
Metal Prices at 1222 GMT
Metal Last Change Pct Move End 2009 Ytd Pct
move
LME Alum 2084.00 -20.00 -0.95 2230.00 -6.55
LME Cu 6885.00 -65.00 -0.94 7375.00 -6.64
LME Lead 1999.00 59.00 +3.04 2432.00 -17.80
LME Nickel 22250.00 250.00 +1.14 18525.00 20.11
LME Tin 17550.00 -150.00 -0.85 16950.00 3.54
LME Zinc 2075.00 -40.00 -1.89 2560.00 -18.95
SHFE Alu 15475.00 -325.00 -2.06 17160.00 -9.82
SHFE Cu* 54500.00 -1430.00 -2.56 59900.00 -9.02
SHFE Zin 16655.00 -600.00 -3.48 21195.00 -21.42
** 1st contract month for COMEX copper
* 3rd contract month for SHFE AL, CU and ZN
SHFE ZN began trading on 26/3/07
(Editing by Sue Thomas)
