By Eric Onstad and Harpreet Bhal
LONDON, May 15 (Reuters) - Copper slid to its lowest in nearly two weeks on
Wednesday after disappointing European economic data fuelled worries about
global growth and metals demand, emboldening funds to add to short positions.
A stronger dollar also weighed on markets and further gains in inventories
reminded investors that most base metals markets are over supplied.
Three-month copper on the London Metal Exchange fell 1.6 percent to
$7,129 at 1433 GMT, having earlier hit its lowest since May 3 at $7,101 a tonne.
On Tuesday, copper logged its steepest fall in two weeks, a decline of 2.3
percent, and is down nearly 10 percent for the year. Many fund investors
regarded a rebound to nearly $7,500 from 18-month lows as an opportunity to add
to short positions.
'I know a lot of funds were thinking that anything towards $7,500 was a sell
and then we've had weaker manufacturing data and that's helped take the edge
off,' said analyst David Wilson at Citigroup in London.
'At the moment there seems to be a ceiling at $7,500 and looks like a good
floor at $6,800. At the bottom end of the range we've seen the arb (arbitrage
with LME) open up with Chinese buying and strong premiums.'
Copper went into negative territory after data showed Germany's economy
managed a surprisingly weak crawl back into growth in the first quarter of the
year, after a sharp contraction at the end of 2012, while France slipped into
In response, the euro tumbled to its lowest in six weeks against the dollar,
adding downward pressure on metals.
Commodities, priced in U.S. dollars, tend to fall when the U.S. unit
strengthens, making them more expensive for holders of other currencies.
'Nobody is expecting much from Europe economically, the impact on metals
comes more from the growth figures' impact on the dollar, rather than demand,'
said analyst Stephen Briggs of BNP Paribas in London.
Over supplied markets showed up on Wednesday in LME inventories, with copper
stocks rising by 8,825 tonnes to 627,525 tonnes, the highest in
10 years, and zinc stocks jumping by 87,525 tonnes to 1.12
In industry news, the Indonesian unit of Freeport-McMoRan Copper & Gold Inc suspended operations at the world's second-largest copper mine on
Wednesday, a source with knowledge of the matter said, after a training tunnel
collapsed the previous day.
'Not a surprising development considering the scale of the accident that set
in yesterday. Rescue efforts are continuing, but the accident is not expected to
impede production since the tunnel site was not an integral part of the supply
chain,' said Ed Meir, analyst at INTL FCStone.
Metal Prices at 1437 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
COMEX Cu 322.60 -6.15 -1.87 365.25 -11.68
LME Alum 1835.00 -22.00 -1.18 2073.00 -11.48
LME Cu 7119.75 -125.25 -1.73 7931.00 -10.23
LME Lead 1954.50 -24.50 -1.24 2330.00 -16.12
LME Nickel 14873.00 -232.00 -1.54 17060.00 -12.82
LME Tin 20625.00 -275.00 -1.32 23400.00 -11.86
LME Zinc 1824.75 -21.25 -1.15 2080.00 -12.27
SHFE Alu 14540.00 -45.00 -0.31 15435.00 -5.80
SHFE Cu* 52330.00 -990.00 -1.86 57690.00 -9.29
SHFE Zin 14355.00 -155.00 -1.07 15625.00 -8.13
** Benchmark month for COMEX copper
* 3rd contract month for SHFE AL, CU and ZN
SHFE ZN began trading on 26/3/07
(Additional reporting by Melanie Burton; Editing by David Cowell)
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