RTRS:METALS-Copper slips as euro zone debt caution prevails
* Eyes on German bond auction, euro zone meeting next week
* Downturn in euro zone private sector eases in Dec
* Aluminium stocks in LME warehouses hit fresh record high
By Harpreet Bhal
LONDON, Jan 4 (Reuters) - Copper prices fell on
Wednesday, with a rally from the previous session dissipating as
concerns about the euro zone debt crisis eroded confidence and
prompted worries about the demand outlook for industrial metals.
Three-month copper on the London Metal Exchange
(LME) slipped to $7,706 a tonne at 0947 GMT, from a close of
$7,790 in the previous session when it hit a three-week high.
The outlook for the market remained shaky due to worries
about the euro zone debt crisis, with a round of bond auctions
likely to be closely watched by investors.
Germany will sell 5 billion euros of 10-year Bunds, kicking
off the new year's debt raising by euro zone sovereigns.
"Worries about the euro zone will be with us for some time
to come. The fundamental problems have yet to be solved and at
some stage this year the politicians really do need to offer a
longer-lasting solution," said Nic Brown, head of commodity
research at Natixis.
"It's not clear that any of the measures that have been
taken so far are addressing the fiscal problems."
The downturn in the euro zone's vast private sector economy
eased slightly towards the new year thanks to an upturn in
Germany, although the region still looks firmly on course for
recession, surveys showed on Wednesday.
All eyes will be on a meeting between France's Nicolas
Sarkozy and German Chancellor Angela Merkel in Berlin on Jan. 9
for talks that are likely to centre on new rules to enforce
budget discipline across the European Union.
Finance ministers from the EU's 27 members will meet on Jan.
23 before their leaders hold a summit a week later.
"No one knows if Europe will blow up. As people come back to
the market, the volatility will return," said Koun-Ken Lee,
commodities strategist at Standard Chartered in Singapore.
Copper posted its first annual decline in three years in
2011 when it lost a fifth of its value on fears related to the
euro zone debt crisis and the global economic slowdown.
FED FORECASTS
The U.S. Federal Reserve said it would begin publishing
forecasts on the path of interest rates later this month, a move
that could suggest rates will be on hold for longer than
previously expected.
"Clearly investors should not see this as a cast iron
guarantee. All this is going to be is the collective wisdom of
the various FOMC members and their expectations for where
interest rates will be and when the first moves will come,"
Brown said.
"In no way does it tie the Fed down to any long-term
strategy."
In industry news, China's large copper smelters and global
miner BHP Billiton BHP.AX BLT.L have settled 2012 term copper
concentrate treatment and refining charges at $60 a tonne and 6
U.S. cents a pound, smelter sources said.
Peru's mining ministry said output of copper rose in
November from the same month a year earlier, but that production
of most metals slipped.
In other metals, aluminium slipped to $2,075 from
Tuesday's close of $2,076 a tonne, while zinc fell to
$1,875 from $1,878.
Aluminium stocks in LME-registered warehouses rose by 4,425
tonnes to a fresh record high of 4.98 million pounds, data
showed.
Soldering metal tin fell to $19,830 from $19,995,
while battery material lead slipped to $2,089 from
$2,100 a tonne. Nickel fell to $18,775 from Tuesday's
close of $18,900.
