Copper tumbled from a record in London and dropped by the daily limit in Shanghai, as some investors deemed the rally excessive on concern that China may step up measures to tighten economic policy, potentially curbing demand for industrial metals. Other base metals also slumped. Copper for three-month delivery on the London Metal Exchange fell as much as 2.9 percent to $8,575 a metric ton and traded at $8,579 at 4:09 p.m. Singapore time. The contract, which reached a record $8,966 a ton yesterday, is down 0.9 percent this week. “The rally before was excessive so we’re seeing an equally strong pullback,” Li Rong, chief analyst at Great Wall Futures Co., said from Shanghai. “Speculation is rife that China may hike interest rates again as early as this evening.” December-delivery copper on the Comex in New York fell as much as 2.9 percent to $3.911 a pound, while Shanghai futures dropped the daily 5 percent limit to 65,640 yuan ($9,899) a ton. “It’s an aggressive decline across the board as longs liquidate at the end of a week which saw a phenomenal rise in prices,” Rao Zhi, an analyst at Yunchen Futures Co., said from Yunnan. “The longer-term positive fundamentals, especially for copper, remain intact and the recovery story hasn’t changed.” Zinc led declines on the London Metal Exchange, falling as much as 4.7 percent, the most since Sept. 9, to $2,422.50 a ton. China sold almost all of the 50,000 tons of zinc ingots it offered at a state auction on Nov. 9 for an average price of 19,511 yuan a ton, the National Development and Reform Commission said today. China Tightens China will raise interest rates by 25 basis points before the end of the year after producer and consumer prices took both markets and the government “by surprise,” HSBC Holdings Plc. said today. Consumer prices gained a more-than-forecast 4.4 percent from a year earlier in October, the statistics bureau said yesterday. Policy makers raised reserve requirements for some banks twice yesterday, taking the total increase to 100 basis points for a few lenders, said two people with direct knowledge of the situation. China last month raised interest rates for the first time since 2007 to cool inflation and has taken multiple measures since April to curb property speculation. Aluminum in London fell 1.5 percent to $2,420 a ton, lead declined 3.3 percent to $2,525 a ton, nickel decreased 2.5 percent to $23,400 a ton, and tin slumped 3.2 percent to $26,125 a ton. To contact the reporter on this story: Glenys Sim in Singapore at Gsim4@bloomberg.net To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net

Source