October 11, 2011 / 9:29 AM / 9 years ago

METALS-Copper ends lower as China funding fears mount

* Copper slammed by China bank funding concerns
    * Technicians eye copper's downside support at 200-day
    * Indonesia's PT Timah restarts tin exports
    * Coming up: Alcoa Q3 earnings late Tuesday

    By Chris Kelly and Harpreet Bhal
    NEW YORK/LONDON, Oct 11 (Reuters) - Copper shed nearly 3
percent on Tuesday as worries about the sustainability of
China's economy compounded the Western world's growth
prospects.
    Investors dumped copper, one of the Asian giant's top
imports.
    An impending vote from Slovakia to become the last of the
17 EU member states to vote to boost the size and scope of the
European Financial Stability Facility added to the cloudy macro
picture.
    Heavily reliant on China's 40-percent global intake of the
metal, investors liquidated positions in lock step with a
near-negative reversal in Asian equities after Central Huijin
Investment Co, a unit of China's sovereign wealth fund, was
reported on Monday to be buying more shares in the country's
biggest banks in an effort to prop up struggling stock markets.
    The move, the first of its kind since the 2008-2009
financial crisis, left a bad taste in investors' mouths, who
were already concerned about sluggish demand this year due to
China's credit clampdown and a weakening property sector.
    "It's a bearish sign. The banks are running out of money
and they need capital. Copper is China, and if China slows down
and has a hard landing, as I suspect that they will, there's
going to be a big problem in copper for a while," said Shawn
Hackett, president of Hackett Financial Advisors, Inc. in
Boynton Beach, Florida.
    "The Chinese stock market has been discounting the great
Chinese slowdown since November of 2010."

    London Metal Exchange (LME) benchmark three-month copper dropped $205 or 2.7 percent to end at $7,290 a tonne.
    It was the metal's first down-day in the past five
sessions, and helped put the brakes on a recovery rally that
lifted prices nearly 13 percent from a 14-month low below
$6,700 per tonne last week.
    Further losses could push prices down to a tentative
support area near the 200-day moving average on the weekly
chart, analysts said.

    In New York, the key December COMEX contract 
declined by 7.75 cents or 2.3 percent to settle at $3.2905 per
lb, after dealing between $3.2305 and $3.3870.
    Volumes picked up a bit from Monday. About 45,000 lots were
traded in New York, still down about 20 percent from the 30-day
norm, according to preliminary Thomson Reuters data.
    "You look at the macro picture and it's the same old story.
Everyone is still nervous about Europe and politicians getting
their act together," analyst David Wilson of Societe Generale
said.
    "We seem to be having a Ground Hog Day - but it's Ground
Hog six months," he added.
    Greece should receive a vital lifeline next month in order
to avoid bankruptcy, its international lenders said on Tuesday,
buying time in a debt crisis that Europe's top central banker
labeled "systemic."
    ALCOA EYED
    Aluminium closed at $2,230 a tonne. It was untraded
at the close on Monday, but was bid at $2,258 a tonne.
    Aluminium producer Alcoa kicks off the third-quarter
U.S. earnings season after markets close on Tuesday.
    Worries about the euro zone debt crisis, and concerns about
demand from top consumer China have put pressure on the outlook
for the company. Results are expected to reflect a weakened
economy, with demand for aluminum strong in some sectors such
as aerospace but weak in others like construction.
   Tin ended down $625 at $22,425 a tonne, under
pressure from the reported restart of tin ingot exports from
Indonesia's state-owned PT Timah , the world's largest
integrated tin miner. The restart broke a stoppage agreed by
smelters last month, an official said on Tuesday.Metal Prices at 1819 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     329.45     -7.35     -2.18     444.70    -25.92
LME Alum    2231.00      3.00     +0.13    2470.00     -9.68
LME Cu      7290.00   -205.00     -2.74    9600.00    -24.06
LME Lead    1985.00    -20.00     -1.00    2550.00    -22.16
LME Nickel 18850.00   -525.00     -2.71   24750.00    -23.84
LME Tin    22375.00   -675.00     -2.93   26900.00    -16.82
LME Zinc    1912.00    -38.00     -1.95    2454.00    -22.09
SHFE Alu   16690.00     15.00     +0.09   16840.00     -0.89
SHFE Cu*   54210.00   -270.00     -0.50   71850.00    -24.55
SHFE Zin   15135.00     25.00     +0.17   19475.00    -22.28
** Benchmark month for COMEX copper
* 3rd contract month for SHFE AL, CU and ZN
SHFE ZN began trading on 26/3/07
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