RTRS:METALS-Copper slips as Italy vote weighs, China demand in focus
* Equities fall, dollar gains on Italy election stalemate
* Physical copper buying by China still slow - traders
* Coming up: U.S. new home sales at 1500 GMT
By Harpreet Bhal
LONDON, Feb 26 (Reuters) - Copper fell on Tuesday, hovering
near two-month lows, as a deadlocked Italian vote prompted
caution about an escalation of the euro zone's debt crisis, with
uncertainty about the outlook for demand also weighing on
prices.
Benchmark three-month copper on the London Metal Exchange
(LME) fell to $7,820.25 a tonne at 1017 GMT, down 0.2
percent from Monday's close of $7,835.
Prices were not far off two-month lows of $7,796 hit on
Friday that pushed copper into negative territory for the year
after erasing gains of nearly 5 percent seen earlier this month.
Reflecting a pullback in risk appetite, world equity markets
sold off and the euro briefly touched a seven-week low against
the dollar.
Investors shelved risk on worries that the euro zone debt
crisis could be re-ignited as Italy, the area's third-largest
economy, faced a dangerous vacuum after the election in which no
group won enough votes to form a government.
"The outcome of the Italian election is weighing on
sentiment as it adds to uncertainty about the euro zone. It
comes at a time when the market was already selling off as
investors have been taking profit from the January rally," said
Andrey Kryuchenkov, analyst at VTB Capital.
"Open interest for copper is shrinking as people close out
long positions, with little indication of buying activity coming
out of China at the moment."
Demand from China, which accounts for 40 percent of global
copper consumption, has remained subdued following the Lunar New
year holiday, with some analysts expecting the weeks ahead to
see a pickup in buying activity.
"Generally over the past few months, people have been a
little more optimistic over Chinese demand, especially given
improvement in its export markets," said Alexandra Knight, a
Melbourne-based economist at National Australia Bank.
"Post the Lunar New Year, the seasonally stronger second
quarter gets under way which helps the metals and bulks," she
said, adding the NAB expected copper prices to firm from here.
TREATMENT CHARGES
In industry news, zinc miners and smelters are negotiating
this week in Mexico over the year's processing fees to turn zinc
concentrate into refined metal.
The annual benchmark for zinc treatment charges, which is
generally settled around this time, was at $191 per tonne last
year, with smelters expected to win higher fees.
"Treatment charges $30 higher than last year would not be
disappointing. The market is smaller and less liquid, also
because all the Chinese concentrate is staying in China. This
should lead to bigger swings going forward," said an official at
Swedish miner Boliden AB.
Benchmark zinc slipped to $2,078 a tonne, from
Monday's close of $2,089, while aluminium fell to
$2,013.25 from $2,037.
Three-month tin was at 423,194 from $23,135, nickel
fell to $16,523 from $16,705 and lead slipped to
$2,277.75 from Monday's close of $2,293.
Metal Prices at 1017 GMT
Comex copper in cents/lb, LME prices in $/T and SHFE prices in yuan/T
Metal Last Change Pct Move End 2012 Ytd Pct
move
COMEX Cu 353.30 -1.00 -0.28 365.25 -3.27
LME Alum 2020.25 -82.75 -3.93 2073.00 -2.54
LME Cu 7825.25 20.25 +0.26 7931.00 -1.33
LME Lead 2284.25 -19.75 -0.86 2330.00 -1.96
LME Nickel 16587.00 -353.00 -2.08 17060.00 -2.77
LME Tin 23102.00 -3.00 -0.01 23400.00 -1.27
LME Zinc 2080.25 -7.75 -0.37 2080.00 0.01
SHFE Alu 14810.00 -45.00 -0.30 15435.00 -4.05
SHFE Cu* 57110.00 -140.00 -0.24 57690.00 -1.01
SHFE Zin 15540.00 -10.00 -0.06 15625.00 -0.54
