FRX: Copper at near 2-week low on eurozone, China worries
MARKETS-METALS (UPDATE 4)
* Dollar gains, euro steady but hovers near 4-yr low vs dlr
* Nickel tumbles more than 5 percent, technical gloomy
* Coming Up: U.S. pending home sales for April, 1400 GMT
(Updates prices and comments)
By Humeyra Pamuk
LONDON, June 2 (Reuters) - Copper hit its lowest in nearly two weeks on Wednesday as the dollar rose and investors sold off riskier assets on fears that the euro zone's persistent debt problems could derail its already fragile economic recovery. Investors also questioned the sustainability of robust demand from China, the world's top consumer of copper and other metals, after a macroeconomic indicator showed the previous day a slowdown in the pace of manufacturing.
European shares lost ground with mining companies such as BHP Billiton and Rio Tinto dropping around 1-1.5 percent. In the metals complex, zinc tumbled to its lowest since September 2009 ad nickel fell more than 5 percent to hit a near four-month low.
Copper for three months delivery on the London Metal Exchange fell to $6,637 a tonne in the open outcry trade, after touching $6,560 a tonne, its lowest since May 21 and versus a close of $6,750 a tonne on Tuesday.
"It's sentiment more than anything else," said Alex Heath, head of base metals at RBC Capital Markets. "Being long commodities was something people were comfortable with, but that has kind of changed."
The dollar's safe-haven status weighed on commodities, Heath said, adding that was strengthened after tensions in the Middle East over the weekend and a warning from the European Central Bank also highlighted risks to Europe's banking sector.
Government sources saying they would keep investing in the euro helped it trim some earlier losses but the single currency still hovered close to a four-year low versus the dollar.
A weaker euro makes dollar-priced industrial metals more expensive for non-U.S. currency holders.
UNREPORTED STOCKS
In further bad news for metals, the pace of factory output in China, the world's largest consumer of copper, eased last month as gradual policy tightening took a toll on new orders.
Unreported base metals stockpiles accumulated in China in the first quarter, analysts at RBS said in a research report, adding that could dent short-term buying.
"Even assuming that strong underlying Chinese demand growth is sustained; it will still take some time to erode the mountain of unreported Chinese base metal stocks," RBS said.
"We believe that a period of lower Chinese base metal imports (copper and nickel) or potential net exports (zinc and aluminium) will be a headwind for base metals in H210."
On LME, copper stocks stood at 475,225 tonnes, their lowest since mid-December 2009 and some analysts believe the fundamentals still make it a good bet.
"Even a small improvement in sentiment and clarity on European and Chinese growth trends would trigger a sharp increase in both volumes and prices, in our view, as consumer stocks remain low, global growth momentum is still very supportive, and the funds remain positive for the medium term," said Andrey Kryuchenkov, analyst at VTB Capital.
Battery material lead was at $1,735 a tonne, after hitting a near two-week low of $1,722 a tonne and versus $1,750 on Tuesday. Zinc fell to $1,817 from $1,853.
Tin was at $17,625 a tonne from $17,800 and aluminium was at $1,984 a tonne from Tuesday's $1,992. Nickel dropped to $19,650 a tonne, its lowest since mid-February. It was last bid at $19,925 a tonne versus $20,450. Metal Prices at 1218 GMT Metal Last Change Percent Move End 2009 Ytd Percent
move COMEX Cu 299.70 -6.60 -2.15 334.65 -10.44 LME Alum 1977.00 -15.00 -0.75 2230.00 -11.35 LME Cu 6618.00 -132.00 -1.96 7375.00 -10.26 LME Lead 1729.00 -21.00 -1.20 2432.00 -28.91 LME Nickel 19775.00 -675.00 -3.30 18525.00 6.75 LME Tin 17575.00 -225.00 -1.26 16950.00 3.69 LME Zinc 1818.00 -35.00 -1.89 2560.00 -28.98 SHFE Alu 14935.00 -220.00 -1.45 17160.00 -12.97 SHFE Cu* 53400.00 -700.00 -1.29 59900.00 -10.85 SHFE Zin 15210.00 -350.00 -2.25 21195.00 -28.24 ** Benchmark month for COMEX copper * 3rd contract month for SHFE AL, CU and ZN SHFE ZN began trading on 26/3/07 (Additional Reporting by Nicholas Trevethan in Singapore, Editing by William Hardy and Sue Thomas)
