Copper futures in Shanghai dropped for a second day as a tumble in equities increased speculation that demand for metals will slump amid the global recession. Futures also fell as the dollar rose, curbing demand for commodities as an alternative investment. The dollar index has risen 0.9 percent since March 23 as copper on the London Metal Exchange declined 2 percent in the same period. The Standard & Poor’s 500 Index lost 2 percent yesterday after gaining 7.1 the previous day on a U.S. plan for bank toxic assets. “In spite of the rush of euphoria following the latest iteration of the U.S. bailout plan, the underlying global economy is still on pretty shaky ground and needs to consolidate,” Leon Westgate, an analyst at Standard Bank Group Ltd., wrote in a report e-mailed today. Copper for June delivery on the Shanghai Futures Exchange slumped as much as 1.4 percent to 32,390 yuan ($4,741) a ton, before trading at 32,770 yuan. May-delivery copper on the Comex division of the New York Mercantile Exchange dropped as much as 0.8 percent to $1.7910 a pound. Copper for three-month delivery on London Metal Exchange lost as much as 0.6 percent to $$3,951 a metric ton, and traded little changed at $3,980 a ton at 10:54 a.m. Singapore time. Copper is the second-best performer on the exchange, up 30 percent for the quarter. The metal used in electrical wiring and pipes gained 2.7 percent in London on March 23 after U.S. Treasury Secretary Timothy Geithner unveiled proposals to finance as much as $1 trillion in purchases of illiquid property assets, triggering a rally in stocks and plunge in the dollar. Investment Flows “It is the interplay between underlying physical demand, and investor flows that govern short to medium term price moves,” said Westgate. “While fresh investment flows may well see metals prices rally once again, any rally will likely also be tempered by the weak fundamental outlook.” The S&P 500 Index fell yesterday as the nation’s top two banking officials called for stronger regulation of financial firms and Nobel Prize-winning economist Paul Krugman said the government will have to seize major lenders. Krugman also predicted the U.S. economy, which shrank 6.2 percent last quarter, won’t stabilize until late this year. Four stocks declined for every three that rose on the MSCI Asia Pacific Index, which dropped 0.2 percent to 83.73 at 10:26 a.m. in Tokyo. Among other LME-traded metals, aluminum rose 1.1 percent to $1,427 a ton, and nickel added 0.5 percent to $9,800 a ton. Zinc advanced 0.4 percent to $1,280 a ton and lead and tin hadn’t traded as of 10:59 a.m. in Singapore.

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