By Glenys Sim June 17 (Bloomberg) -- Copper declined for a second day after a drop in U.S. housing starts signaled slower demand for industrial metals. Zinc, lead and nickel also fell. Three-month copper on the London Metal Exchange fell as much as 2.1 percent to $6,510 a metric ton and traded at $6,525 at 12:02 p.m. in Singapore. Futures in Shanghai resumed trading today after a three-day holiday, gaining as much as 2.5 percent to 52,680 yuan ($7,713) a ton, before ending the morning up 0.9 percent at 51,850 yuan a ton. U.S. housing starts fell 10 percent, the biggest decline since March 2009, following the expiration of a government tax credit, according to a report yesterday. Building permits, a sign of future construction, declined to a one-year low, according to the Commerce Department. As long as “data keeps coming out that doesn’t support the recovery story, we’re going to see a lid on prices,” said Yang Wenhu, an analyst at CES Futures Brokerage Co. There was also concern that Europe’s fiscal crisis isn’t resolved, Yang said. Copper, seen by some investors as a gauge of economic activity as it’s used in construction and transport, has lost 11 percent this year on concern that Europe’s debt crisis, which began in Greece, will derail the economic recovery. Construction accounts for a quarter of copper demand, according to the Copper Development Association. Builders are the biggest users of the metal in the U.S., the world’s second- largest consumer after China. “Shanghai’s markets are just catching up with the advance made in international prices while China was on holiday,” said Yang. London copper gained 3.1 percent on June 14 and 15, before dropping 0.5 percent yesterday. Zinc Slumps Zinc in London tumbled as much as 4.2 percent to $1,752 a ton, before trading at $1,770. Futures in Shanghai dropped 0.3 percent to 14,335 yuan a ton by the midday break, reversing a gain of as much as 2.2 percent earlier. “Zinc’s fundamentals are definitely not as good as copper’s,” said Yang. “The summer slowdown will add to downward pressure on prices.” Stockpiles of the metal in exchange-monitored warehouses are near the highest level since April 2007, when the contract started. Metals also declined today as the dollar climbed for a second day against a six-currency basket including the euro and yen on speculation that European Union leaders will agree on ways to tighten financial-market regulation at a summit today. Aluminum in London fell 1.7 percent to $1,971.25 a ton, lead dropped 1.7 percent to $1,731 a ton, nickel declined 2.3 percent to $19,580 a ton and tin lost 1.3 percent to $17,575 a ton at 12:57 p.m. Singapore time. To contact the reporter for this story: Glenys Sim in Singapore at sgsim4@bloomberg.net

Source