July 13 (Bloomberg) -- Copper fell for a second day in London on speculation that demand may weaken in China, the world’s top consumer, after the government reaffirmed a commitment to curb lending. Housing policies such as lending rules will be enforced “strictly” to prevent speculative investment, China’s Ministry of Housing and Urban-Rural Development said today. Concern about efforts to rein in the country’s surging economy helped to pull copper down by 16 percent in the second quarter on the London Metal Exchange. The metal dropped today “following on from yesterday’s price erosion in response to concern about China’s determination to cool real-estate markets,” Marc Elliott, an analyst at Fairfax IS in London, said in a report. Copper for delivery in three months slid $43, or 0.6 percent, to $6,587 a metric ton at 10:03 a.m. on the LME. Futures for September delivery declined 0.7 percent to $2.987 a pound on the Comex in New York. All of the six main metals traded on the LME fell, led by zinc. Prices also retreated as the dollar strengthened, making metals priced in the currency more expensive in terms of other monies. The U.S. Dollar Index, a six-currency gauge of the dollar’s strength, rose as much as 0.4 percent and has gained 8.5 percent this year, contributing to LME copper’s 11 percent drop. Portuguese Rating Copper also has slid on concern that Europe’s sovereign- debt crisis may hamper economies, crimping usage of metals. Portugal’s credit rating was today cut two levels to A1 at Moody’s Investors Service because of a growing debt burden and weak economic growth prospects. China’s benchmark stock index today declined the most in two weeks after the government quashed speculation it would abandon real-estate curbs that drove property prices lower for the first time in 16 months. Demand from the Asian nation for copper, used in electrical equipment and construction, helped to lift LME prices by 34 percent in the past year. “The impact of attempts to curb speculation in the Chinese property sector is uncertain, but continues to weigh on sentiment,” Daniel Major, an analyst at RBS Global Banking & Markets in London, said by phone. Inventories Contract Copper stockpiles tracked by the LME shrank for an 18th day to 432,550 tons, the lowest level since Nov. 26, according to a daily report. They’re down 14 percent this year and headed for the first annual drop since 2004. Bookings to remove metal from LME warehouses fell for a fourth day, down 0.6 percent to 27,175 tons. Aluminum for three-month delivery on the LME fell 0.4 percent to $1,963 a ton. Alcoa Inc., the largest U.S. producer, reported better-than-estimated second-quarter profit yesterday and said stronger demand from end-use markets will mean a 12 percent increase in global consumption this year, more than the 10 percent it had forecast. Smelters in China, the world’s largest maker of the lightweight metal, may idle as much as 1.5 million tons of capacity in the third quarter because prices have dropped below some producers’ costs, Klaus Kleinfeld, Alcoa’s chief executive officer, said yesterday. LME-monitored aluminum inventories dropped for a fourth day to 4.38 million tons, the lowest since June 29, 2009. Immediate- delivery metal’s discount to the three-month price, the so- called contango, narrowed to $20.25 a ton yesterday, down from $26.75 a week ago. Lead declined 0.3 percent to $1,778 a ton and nickel dropped 0.3 percent to $19,150 a ton. Zinc slid 1.4 percent to $1,829.50 a ton and tin fell 0.4 percent to $17,450 a ton. --With assistance from Emma Ross-Thomas in Madrid and Edmond Lococo in Boston. Editors: Dan Weeks, John Deane. To contact the reporter on the story: Anna Stablum in London at astablum@bloomberg.net. To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net.

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