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METALS-Copper falls to lowest since Dec in commodities rout

Published 05/05/2011, 12:27 PM
Updated 05/05/2011, 04:21 PM
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* Copper falls to lowest so far in 2011

* Dollar fall fails to lift metals

* U.S. jobless claims rise

(Updates with closing prices)

By Sue Thomas

LONDON, May 5 (Reuters) - High anxiety about global economic growth knocked copper to its lowest this year on Thursday, sweeping the rest of the base metals complex with it in a broad-based fall across commodities.

Tepid economic data from top metals consumers the United States and China, as well as in Europe, have stoked big concerns about growth, and the impact on demand for base metals.

In the latest reports, U.S. jobless claims hit an eight-month high, and productivity growth slowed.

Copper for three-months delivery on the London Metal Exchange fell to a low of $8,744 per tonne, its lowest since December and on track for its biggest weekly loss since mid-March. It closed at $8,820, from $9,124 on Wednesday.

Tin was the biggest loser, shedding more than 7 percent, to $28,500 at one point, its lowest since March, from a last bid of $30,950 on Wednesday. It closed at $28,900.

"It's a broad-based, risk-off selling momentum that has gathered pace," said Barclays Capital analyst Gayle Berry.

Brent and U.S. crude futures tumbled sharply, and silver fell to a six-week low.

The 19-commodity Reuters-Jefferies CRB index, a global benchmark for the asset class, fell 3.7 percent, on track for its sharpest one-day loss in two years as prices of oil, metals and grains plunged on widespread liquidation.

"Something has spooked the market, sentiment has nose dived and I think the fact that it is sentiment driven is illustrated in that it's not just happening in the base metals," Berry said.

That "something", Berry said, could include the prospect of easy monetary policy ending in June, big political developments, including the death of Osama bin Laden, uncertainties about Chinese monetary policy, as well as faltering U.S. growth.

"Demand for metals appears to be softening and we're seeing evidence of that coming out in the data," Alex Heath, RBC Capital Markets head of base metals, said.

"These are the kind of numbers that you're expecting to see at the stage now where people are talking of withdrawing money from the system."

The euro fell against the dollar, heading for its biggest one-day slide against the U.S. currency since November after the European Central Bank signalled that interest rates were unlikely to rise next month.

A stronger dollar makes commodities cheaper for holders of other currencies.

DEMAND

Base metals fundamentals also pointed to faltering demand, with data on Thursday showing a large build in copper inventories, with big inflows into south Asian locations

"For a while people ignored the fundamental news, because so much money was cheap and available," Heath said.

"But now people are looking at what is going on industrially, particularly from a global recovery perspective, and are thinking this looks a bit overdone, let's lock in some profits."

Aluminium closed at $2,635, from a close of $2,750 on Wednesay. Zinc, used in galvanizing, closed at $2,125 from $2,190. Battery material lead was $2,295 from $2,455 and nickel was at $24,525 from $25,825.

Metal Prices at 1619 GMT Comex copper in cents/lb, LME prices in $/T and SHFE prices in yuan/T Metal Last Change Percent Move End 2010 Ytd Percent

move COMEX Cu 400.15 -12.45 -3.02 444.70 -10.02 LME Alum 2635.00 -115.00 -4.18 2470.00 6.68 LME Cu 8819.00 -305.00 -3.34 9600.00 -8.14 LME Lead 2296.00 -159.00 -6.48 2550.00 -9.96 LME Nickel 24520.00 -1305.00 -5.05 24750.00 -0.93 LME Tin 28850.00 -3450.00 -10.68 26900.00 7.25 LME Zinc 2124.50 -65.50 -2.99 2454.00 -13.43 SHFE Alu 16720.00 -120.00 -0.71 16840.00 -0.71 SHFE Cu* 67040.00 -870.00 -1.28 71850.00 -6.69 SHFE Zin 16720.00 -495.00 -2.88 19475.00 -14.15 ** Benchmark month for COMEX copper * 3rd contract month for SHFE AL, CU and ZN SHFE ZN began trading on 26/3/07 (Edting by Keiron Henderson)

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