MW:Copper drops on continued Chinese inflation concerns
SHANGHAI (REUTERS) -
Copper lost its footing on Monday on continued concern that inflation pressures may prompt top buyer China to tighten credit further along with worries linked to the euro zone debt crisis and a stronger dollar.
Three-month copper on the London Metal Exchange slipped 0.8 percent to $8,980 a tonne by 0403 GMT, after climbing almost 1 percent in the previous session, continuing a pattern of rangebound trade.
The most-active September copper contract on the Shanghai Futures Exchange dropped 1.4 percent to 67,060 yuan per tonne by its midday close.
"Copper price movements continue to be rangebound today, reacting to short-term changes in macroeconomics. Some of the major macroeconomic factors affecting base metals now are the U.S. economy, the euro-debt crisis and the Chinese economy," said Jinrui Futures analyst Guo Yong.
Chinese Premier Wen Jiabao said it would be difficult for China to keep inflation under four percent this year but under five percent is achievable, Hong Kong televisions reported on Monday.
Wen's statement means China could miss its consumer price inflation target this year, analysts said, causing investors to focus on possible tightening measures ahead despite separate positive remarks about the price outlook he made at the weekend during a European tour.
Wen's remarks followed a statement on Saturday by China's Vice Premier, Li Keqiang, who said that controlling inflation is the government's top policy priority.
"'m not too pessimistic about Premier Wen's statements on the CPI (consumer price index), since I'm sure the government will do its best to rein in prices in the longer term. But how the market reads this piece of news in the shorter term is another matter," Guo said.
Wen also said on Monday that he saw China's GDP growth remaining above 8 to 9 percent, TV stations reported.
Greece's parliament begins on Monday to debate a deeply unpopular austerity plan which international lenders are demanding to see approved this week to avert the threat of bankruptcy.
The U.S. dollar rose and Asian equities slipped on Monday, with investors positioning their portfolios ahead of the Greek vote, likely on Wednesday.
Wall Street dropped for a third day on Friday on worries about the Italian banking sector and Greece's debt crisis, but the S&P 500 managed to hold its 200-day moving average in a sign buyers still see value.
