RTRS:METALS-Copper falls as euro zone, economy fears weigh
* Copper down 8 pct in November
* Nickel falls to lowest in nearly two years
* Coming up: U.S. ADP employment Nov 1315 GMT
By Harpreet Bhal
LONDON, Nov 30 (Reuters) - Copper fell by more than 2
percent on Wednesday, as intensifying concerns about the euro zone
debt crisis weighed on the outlook for economic growth and demand
for metals, with a stronger dollar adding to pressure on base
metals.
Euro zone ministers who met on Tuesday agreed to boost the
firepower of their rescue fund, but couldn't say by how much, and
may turn to the International Monetary Fund for more help.
Also weighing on the market, Standard & Poor's downgraded 15
banking companies, mostly in the U.S. and Europe in a move that
could increase already soaring funding costs for some banks.
Benchmark copper was trading at $7,345 at 1017 GMT, down
from Tuesday's close of $7,490 a tonne. The metal used in power and
construction is down 8 percent this month, on track for its first
monthly fall in two months.
"It is very difficult to see a change of sentiment especially if
the situation (in the euro zone) continues to deteriorate," said
Eugen Weinberg, head of commodity research at Commerzbank.
"The situation seems relatively shaky so people are avoiding
exposure to economy-linked commodities like industrial metals."
A strong dollar also weighed on the market, as the euro dropped.
A stronger dollar makes commodities priced in the U.S. unit more
expensive for holders of other currencies.
Focus is turning to a crucial European Union summit on Dec. 9,
with Germany and France working to propose a more rapid European
fiscal integration, while Germany's opposition to an expanded role
of the European Central Bank in lending to the region's financially
strapped economies has hurt market sentiment.
ECONOMY FEARS
Investors are worried about the impact of a slowdown in growth
in the Western economy on emerging economies such as China, the
world's top copper consumer.
"Market participants are still showing little confidence in
policymakers' efforts to tackle the debt crisis and growth fears
would not evaporate overnight," Andrey Kryuchenkov, analyst at VTB
Capital said in a note.
"Naturally, slowing growth in the monetary union and a possible
credit event is a growing concern with the world's largest consumer
of base metals. China is heavily reliant on its falling exports to
the EU with Beijing recently expressing its deep worries over the
crisis."
In a note to clients, Morgan Stanley said gold, silver and
livestock are the broker's most preferred commodities on
expectations they could perform well in a global economic slowdown,
while base metals and crude oil are the least preferred.
Copper has lost more than 23 percent in the year to date, but is
still up 1.7 percent so far this week.
Data from the LME showed copper stocks in LME-monitored
warehouses drop by 3,900 tonnes, the biggest single day outflow in
six weeks.
At 386,625 tonnes, stocks are at the lowest since January but a
falling ratio of cancelled warrants to total stocks highlights a
slowdown in demand.
In other metals, nickel traded at $16,720 from $17,050,
earlier hitting its lowest level in nearly two years at $16,625.
Western Areas WSA.AX, Australia's third-largest nickel miner,
will sell China's Jinchuan Group up to 15,000 tonnes of nickel in
concentate over a one-year period starting next March, Western Areas
said on Wednesday.
Aluminium slipped to $1,983 a tonne, from a close of
$1,996 a tonne on Tuesday.
China's annual capacity of primary aluminium may rise by 60
percent in coming four years as smelters build new facilities in
resource-rich western and northern provinces, a director at the
state-backed China Nonferrous Metals Industry Association said on
Wednesday.
Zinc eased to $1,921 from a close of $1,958 a tonne on
Tuesday, while tin slipped to $20,060 from $20,550 a tonne.
Lead fell to $1,998.25 from $2,031 a tonne.
Metal Prices at 1019 GMT
Comex copper in cents/lb, LME prices in $/T and SHFE prices in
yuan/T
Metal Last Change Pct Move End 2010 Ytd Pct
move
COMEX Cu 332.05 -6.25 -1.85 444.70 -25.33
LME Alum 1983.25 -12.75 -0.64 2470.00 -19.71
LME Cu 7351.00 -139.00 -1.86 9600.00 -23.43
LME Lead 1998.00 -33.00 -1.62 2550.00 -21.65
LME Nickel 16726.00 -324.00 -1.90 24750.00 -32.42
LME Tin 20060.00 -490.00 -2.38 26900.00 -25.43
LME Zinc 1923.75 -34.25 -1.75 2454.00 -21.61
SHFE Alu 15835.00 -80.00 -0.50 16840.00 -5.97
SHFE Cu* 54560.00 -900.00 -1.62 71850.00 -24.06
SHFE Zin 15115.00 -130.00 -0.85 19475.00 -22.39
** Benchmark month for COMEX copper
* 3rd contract month for SHFE AL, CU and ZN
SHFE ZN began trading on 26/3/07
