December 8, 2011 / 10:49 AM / 8 years ago

METALS-Copper falls on renewed euro zone worries

* Euro debt crisis trumps all else, weighs on demand prospects
    * Background worries over China slowdown weigh

    By Harpreet Bhal and Maytaal Angel	
    LONDON, Dec 8 (Reuters) - Copper hit a one-week low on Thursday as
hopes for swift action to combat Europe's debt crisis were dashed after the
European Central Bank underlined its reluctance to pave the way for bond buying
on a large scale.	
   In comments after the central bank's move to cut interest rates to 1 percent,
ECB President Mario Draghi poured cold water on market expectations the ECB
could step up bond purchases seen as key to stabilizing rising borrowing costs
of indebted members of the euro zone. 	
    Draghi also said lending money to the International Monetary Fund to buy
euro zone government bonds was not compatible with EU treaties, though against
that he did cut rates and act to extend liquidity provisions for stressed
European banks.   	
    "Draghi has not signalled any bond buying, though I think the market was
running ahead of itself hoping for that," said Danske Bank analyst Arne Lohmann
    "They offered banks loans for 36 months. I think from a base metal
perspective the important thing is that the ECB is giving even more non-standard
measures to banks and that should remove some of the downside risk for European
    Three-month copper on the London Metal Exchange (LME) hit a session
low of $7,660, its lowest since November 30 this year. It ended at $7,710 a
tonne on the kerb, down from Wednesday's close of $7,820 a tonne. 	
    Copper traded in positive territory earlier this session amid hopes that
France and Germany will propose reforms to tighten fiscal discipline in the euro
zone at the summit on Friday, dubbed as a last chance to save the euro by the
popular press. 	
    Also helping the metal, LME copper stocks, seen as an indicator of demand
strength, continued their relentless decline, falling 2,050 tonnes to 387,400
tonnes  - down nearly 100,000 tonnes from levels seen in March this year. 
    Meanwhile in United States, demand prospects for copper brightened after
data showed new U.S. claims for unemployment benefits dropped to a nine-month
low last week, suggesting the labor market recovery was gaining momentum.
    Europe's debt crisis has been trumping all else as far as copper price
direction goes.	
    "Unless we get a major supportive move out of the European meetings, the
bleed could well resume," said RBC Capital Markets in a note.	
    On the sidelines, investors are also growing concerned about demand from top
consumer China, where concerns are rising about an slowdown in its booming
economic growth.	
    More evidence on China's economy will come from its November export data,
due on Friday, which is seen growing at its weakest pace in two years.
    Its commodity imports data for November, due out on Saturday, are expected
to show an improvement in copper imports from October due to increased arrivals
of bookings that were made earlier. 	
    Zinc ended at $1,988 a tonne from a close of $2,027 a tonne on
    Data from the LME showed a 20,225 tonne change in zinc stocks in
LME-registered warehouses, with an inflow of 21,425 tonnes into warehouses in
New Orleans. 	
    Aluminium closed at $2,065 a tonne from $2,078, while battery
material lead ended at $2,103 from $2,148. 	
    Tin ended at $20,200 a tonne from $20,500 and nickel at
$18,300 from $18,050.	
    Indonesia's refined tin exports plunged 75 percent in November from a year
ago, following a self-imposed ban by smelters on shipments from the world's top
exporter, a trade ministry official said on Thursday. 	
 Metal Prices at 1711 GMT
 Comex copper in cents/lb, LME prices in $/T and SHFE prices in yuan/T
  Metal            Last      Change  Pct Move   End 2009   Ytd Pct
  COMEX Cu       350.40       -4.50     -1.27     334.65      4.71
  LME Alum      2064.00      -14.00     -0.67    2230.00     -7.44
  LME Cu        7700.00     -120.00     -1.53    7375.00      4.41
  LME Lead      2103.00      -45.00     -2.09    2432.00    -13.53
  LME Nickel   18295.00      245.00     +1.36   18525.00     -1.24
  LME Tin      20125.00     -375.00     -1.83   16950.00     18.73
  LME Zinc      1984.00      -43.00     -2.12    2560.00    -22.50
  SHFE Alu     16160.00      -35.00     -0.22   17160.00     -5.83
  SHFE Cu*     57860.00     -500.00     -0.86   59900.00     -3.41
  SHFE Zin     15775.00      -40.00     -0.25   21195.00    -25.57
 ** 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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