December 30, 2011 / 7:33 AM / 8 years ago

METALS-Copper heads for first drop in three years on demand fears

* LME copper falls 21 pct in 2011 after 30 percent gain in
2010
    * Euro zone debt crisis weighs on metal demand
    * China's slowdown erodes investor confidence

 (Updates prices)	
    By Jane Lee	
    KUALA LUMPUR, Dec 30 (Reuters) - Copper is headed for
its first annual drop in three years after slowing global growth
sparked by the euro zone debt crisis heightened worries that
demand growth for the industrial metal may falter.	
    Prices are down 21 percent this year following a 30 percent
increase in 2010 and a 140 percent jump in 2009 when surging
demand from China's manufacturers sent copper higher. China
accounts for 40 percent of refined copper consumption in the
world.	
    "The fear of a U.S. recession in the middle of this year
subsequently turned into fears of a euro zone slump," said Ang
Kok Heng, who helps manage about $400 million as chief
investment officer at Phillip Capital Management in Kuala
Lumpur.	
    "The euro zone trouble cannot be resolved immediately, and
we can only hope it's contained next year."	
    However, three-month copper on the London Metal Exchange
 snapped two days of declines and climbed 1.5 percent to
$7,537 a tonne by 0711 GMT on Friday as signs of improvement in
the U.S. economy offset worries about the euro zone and
encouraged investors to increase bets on riskier assets.	
    The most-traded March copper contract on the Shanghai
Futures Exchange gained 2.1 percent to 55,360 yuan
($8,800) a tonne.	
    Europe's sovereign debt crisis has tempered demand for
manufactured goods from China and the rest of the world, sending
commodities lower this year. The 19-commodity Thomson
Reuters-Jefferies CRB index has lost 8.5 percent this
year.	
    China's vast factory sector shrank again in December as
demand at home and abroad slackened, a purchasing managers'
survey showed on Friday. 	
	
    	
    LME copper will rise to $7,689 per tonne as a
rebound from the Dec. 15 low of $7,131 has extended, according
to Reuters technical analyst Wang Tao. 	
    The dollar index retreated from a one-year peak of
80.854 to 80.410 and the euro bounced off a 15-month low of
$1.2856 to $1.2951.   	
    The euro clung to modest overnight gains in Asia on Friday,
having been buoyed by a wave of short covering after an attempt
on the downside fizzled out. 	
 	
  Base metals prices at 0711 GMT
  Metal              Last       Change   Pct Move YTD pct chg
  LME Cu            7537.00    112.00     +1.51    -21.49
  SHFE CU FUT MAR2    55360      1140     +2.10    -22.95
  LME Alum          1997.25      6.25     +0.31    -19.14
  SHFE AL FUT MAR2    15845       -10     -0.06     -5.91
  HG COPPER MAR2     341.85      4.85     +1.44    -23.00
  LME Zinc          1850.00     18.00     +0.98    -24.61
  SHFE ZN FUT APR2    14820       235     +1.61    -23.90
  LME Nickel       18377.00    327.00     +1.81    -25.75
  LME Lead          2009.00     10.00     +0.50    -21.22
  SHFE PB FUT      15250.00    185.00     +1.23    -16.89
  LME Tin          18920.00    120.00     +0.64    -29.67
  LME/Shanghai arb     188
 
   Shanghai and COMEX contracts show most active months
   ^ LME 3-m copper in yuan, including 17 pct VAT, minus SHFE  
 third month
 	
($1 = 6.3192 Chinese yuan)	
	
	
 (Reporting by Jane Lee; Editing by Sugita Katyal)
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