Copper fell to a 14-month low in London, extending the biggest quarterly drop since 2008, on concern metals demand is set to wane as economies slow. Manufacturing contracted in Europe for a second month, Markit Economics said today. A separate report may show U.S. factories grew at the slowest pace since July 2009. Japan’s Tankan survey showed sentiment among the nation’s largest manufacturers remains worse than before March’s earthquake. “Lower demand owing to lower industrial production forecasts make the complex vulnerable, particularly in the case of a developed markets recession,” Morgan Stanley analyst Hussein Allidina said in a report e-mailed today. The bank cut its forecast for copper’s price next year. Copper for three-month delivery dropped $232, or 3.3 percent, to $6,786.50 a metric ton by 9:31 a.m. on the London Metal Exchange. Prices reached $6,635, the lowest level since July 2010. The metal for December delivery fell 2.9 percent to $3.062 a pound on the Comex in New York. Morgan Stanley cut its forecast for the price of copper next year by 17 percent to $3.8 a pound, citing a “rapidly diminishing prospect of global growth being robust enough to deliver stronger base metals prices next year.” The U.S. Institute for Supply Management’s factory index probably fell to 50.3 from 50.6 in August, according to a Bloomberg survey of economists ahead of data due at 3 p.m. London time. A reading of 50 is the dividing line between contraction and expansion. Stronger Dollar Prices dropped as the dollar strengthened, making raw materials priced in the currency more expensive in terms of other monies. The U.S. Dollar Index, a six-currency gauge of the greenback’s strength, increased as much as 0.8 percent. The MSCI World Index of equities retreated for a second day and U.S. and German government bonds rose. Hedge-fund managers and other large speculators decreased their net-short position in New York copper futures in the week ended Sept. 27, according to U.S. Commodity Futures Trading Commission data. Net short positions, or bets prices will fall, slid 1,837 contracts, or 56 percent, from a week earlier. Copper stockpiles in warehouses monitored by exchanges in London, Shanghai and New York are up 15 percent this year, data compiled by Bloomberg show. “Deleveraging and investor redemptions out of commodities funds” are weighing on metals prices, said Ole Hansen, senior manager of trading advisory at Saxo Bank A/S in Copenhagen. “China away for most of the week and the LME Week in London always throws a few surprises, as the market is becomes very illiquid at times.” LME Week In China, the top global copper consumer, the Shanghai Futures Exchange is closed this week for the National Day holidays. As many as 5,000 merchants have gathered in the U.K. capital for the annual London Metal Exchange week, during which supply contracts are discussed. Aluminum for three-month delivery on the LME advanced 0.4 percent to $2,166 a ton and zinc rose 0.6 percent to $1,870.50 a ton. Tin declined 1.7 percent to $20,000 a ton, lead lost 1.4 percent to $1,957.75 a ton and nickel gained 1.6 percent to $17,874 a ton. To contact the reporter on this story: Maria Kolesnikova in London at mkolesnikova@bloomberg.net To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net

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