Copper fell from a record in London as speculation that China, the world’s biggest consumer of the metal, is preparing to raise interest rates fueled concern prices climbed too high to reflect demand. Copper slid the most since Oct. 19 on the London Metal Exchange after yesterday reaching an all-time high of $8,966 a metric ton. Chinese inflation rose to a two-year high last month, figures showed yesterday. China will raise interest rates by 0.25 percentage point before the end of the year, HSBC Holdings Plc said today. “Concerns that China might implement more and even stronger measures to tighten economic policy, given the relatively high inflation number yesterday,” drove metals lower, said Daniel Briesemann, an analyst at Commerzbank AG in Frankfurt. Copper for delivery in three months fell $186, or 2.1 percent, to $8,644 a ton at 11:17 a.m. on the LME after sliding as much as 2.9 percent. Copper for December delivery declined 2.1 percent to $3.9365 a pound on the Comex in New York after reaching a 30-month high yesterday. All of the six main metals traded on the LME dropped, led by zinc. Prices also retreated as the euro fell to a six-week low against the dollar on sovereign-debt concerns in Europe and reports showing the region’s biggest economies are slowing. Gains by the dollar make metals priced in the currency more expensive in terms of other monies and sap demand for commodities as an alternative investment. Chinese Inflation “Profit-taking and a stronger dollar contributed to the falling price today,” Marc Elliott, an analyst at Fairfax IS in London, said in a report. Consumer prices gained a more-than-forecast 4.4 percent from a year earlier in October, China’s statistics bureau said yesterday. The figures and others on producer prices took markets and the government “by surprise,” HSBC said. “Speculation is rife that China may hike interest rates again as early as this evening,” Li Rong, chief analyst at Great Wall Futures Co., said from Shanghai. China last month raised interest rates for the first time since 2007 to cool inflation and has taken measures since April to curb property speculation. Policy makers increased 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. Smaller Premium “It’s too early to call today’s price movement the beginning of a longer correction,” Commerzbank’s Briesemann said. “Fundamentals, at least in some of the base-metal markets, are still improving and the longer upward trend is still intact.” Immediate-delivery LME copper’s premium to the three-month contract fell 25 percent to $5.25 a ton yesterday. Prices moved on Nov. 8 to a so-called backwardation, when nearby metal trades above longer-dated contracts, potentially indicating concern about near-term supply. LME copper stockpiles shrank for a 38th week, daily exchange figures showed, slipping to 362,775 tons today. Copper inventories monitored by the Shanghai Futures Exchange gained 8,572 tons to 115,423 tons on the week, the exchange said today. Copper may drop next week as investors judge that its climb to a record level leaves prices no longer reflecting the outlook for demand, a Bloomberg News survey showed. Zinc for three-month delivery on the LME shed 3.5 percent to $2,445 a ton. China sold almost all of the 50,000 tons of zinc ingots it offered at a state auction on Nov. 9, the National Development and Reform Commission said today. Tin dropped 2 percent to $26,450 a ton. Prices reached a record $27,500 on Nov. 9. The metal has jumped 56 percent this year, leading advances on the LME, after production was disrupted in Indonesia and the Democratic Republic of the Congo. Aluminum fell 0.5 percent to $2,442 a ton, nickel lost 2.1 percent to $23,500 a ton and lead declined 2.5 percent to $2,546 a ton. To contact the reporter on this story: Maria Kolesnikova in Moscow at mkolesnikova@bloomberg.net. To contact the editor responsible for this story: Claudia Carpenter at ccarpenter@bloomberg.net.

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