RTRS:METALS-Copper slips after rally; euro zone meet eyed
* LME copper off 0.5 pct after rising the most in a month
* Scepticism on euro zone bailout fund spurs caution
* Coming Up: U.S. consumer confidence, 1500 GMT
(Updates prices)
By Manolo Serapio Jr
SINGAPORE, Nov 29 (Reuters) - London copper retreated
on Tuesday, after posting its biggest single-day gain in a month
in the previous session, as investors weighed whether euro zone
policymakers can actually come up with solid measures to resolve
a widening sovereign debt crisis.
Hopes that Europe would take bolder steps to address its
long-running debt crisis, which has sharply dented the outlook
for global commodity demand, lifted three-month copper on the
London Metal Exchange by nearly 4 percent on Monday, its
steepest rise since Oct. 27.
By 0705 GMT, LME copper was down half a percent at $7,459 a
tonne, after hitting a one-week top of $7,535 on Monday.
All eyes are now on a meeting of euro zone finance ministers
later in the day, at which they are expected to approve detailed
rules for the region's 440 billion euro bailout fund that will
clear the way for the facility to attract cash from private and
public investors to its co-investment funds.
"There was some optimism in markets yesterday but Europe's
intractable problems are clearly difficult to combat and there
are no quick fixes in sight," said Ong Yi Ling, analyst at
Phillip Futures.
"The European Financial Stability Facility may not have
sufficient clout and we will still need greater involvement of
the European Central Bank. Investors are being cautious ahead of
the meeting."
COPPER STOCKPILES FALL
LME copper has fallen 22 percent this year and is on route
for its first annual decline since 2008, when the global
financial crisis tripped the world economy.
In Shanghai, the most-active February copper contract
gained 0.2 percent to close at 55,460 yuan a tonne.
The euro zone's debt crisis has become the biggest threat to
the global economy and a break-up of the region can no longer be
ruled out, according to the OECD, which urged the European
Central Bank to play a bigger role in defusing the crisis.
The Organisation for Economic Cooperation and Development
(OECD) said the ECB should cut interest rates and step up its
bond purchase programme to support confidence and economic
activity in the euro zone, which has entered a mild recession.
Ratings agency Moody's said it could downgrade the
subordinated debt of 87 banks across 15 European Union nations
on concerns that governments would be too cash-strapped to bail
out holders of riskier bank debt in times of stress.
In the United States, Fitch Ratings revised its outlook on
the U.S. credit rating to negative from stable after a special
congressional committee last week failed to agree on at least
$1.2 trillion in deficit-reduction measures.
But in a sign copper demand remains firm in the face of
troubled economies in Europe and the United States, LME copper
stockpiles MCU-STOCKS fell 1,950 tonnes to 392,775 tonnes on
Monday, the lowest level since February.
In China, copper inventories in warehouses monitored by the
Shanghai Futures Exchange CU-STX-SGH fell 12 percent to 65,205
tonnes last week.
Despite the weakness in European consumption, Phillip
Futures' Ong expects China's copper demand to grow about 6-7
percent in 2012, albeit slower than forecast double-digit
expansion this year, as the world's top copper consumer
continues to invest in big-ticket infrastructure projects.
But copper prices may be stuck in a tight range until the
first quarter of 2012, said a Shanghai-based metals trader.
"I'm quite neutral at the moment, not so bullish, a bit
bearish. I don't see any big price movements until the first
quarter," he said.
"But when people get tired of bad news from Europe, may be
they will begin to consider taking long positions again."
Base metals prices at 0705 GMT
Metal Last Change Pct Move YTD pct chg
LME Cu 7459.00 -36.00 -0.48 -22.30
SHFE CU FUT FEB2 55460 90 +0.16 -22.81
LME Alum 2032.50 6.50 +0.32 -17.71
SHFE AL FUT FEB2 15915 85 +0.54 -5.49
HG COPPER DEC1 336.85 0.80 +0.24 -24.12
LME Zinc 1945.50 -11.50 -0.59 -20.72
SHFE ZN FUT MAR2 15260 70 +0.46 -21.64
LME Nickel 17275.00 95.00 +0.55 -30.20
LME Lead 2028.00 3.00 +0.15 -20.47
SHFE PB FUT 15440 -5 -0.03 -15.86
LME Tin 20600.00 -250.00 -1.20 -23.42
LME/Shanghai arb 208
Shanghai and COMEX contracts show most active months
^ LME 3-m copper in yuan, including 17 pct VAT, minus SHFE third month
