January 5, 2012 / 10:14 AM / 8 years ago

METALS-Copper steady as Europe debt, bank troubles weigh

* Rio declares force majeure at 2 Canada aluminium smelters
    * Euro hits 15-month low against dollar
    * Bank's reluctance to lend weighs on sentiment

    By Silvia Antonioli and Maytaal Angel	
    LONDON, Jan 5 (Reuters) - Copper steadied on Thursday as upbeat U.S.
data brought a pause in selling pressure, although the respite was temporary,
with concerns over Europe's debt crisis and reluctance by banks to lend to
industry still making themselves felt.	
    Benchmark copper on the London Metal Exchange closed flat at $7,540
a tonne. The metal lost 21 percent last year as Europe's debt crisis crippled
demand prospects, and as stellar growth in top consumer China faded.	
    Worries over euro zone sovereign funding pressures and signs of weakness in
the region's banks sent the euro to a 15-month low against the dollar on
Thursday, making dollar-priced metals more costly for European investors. 	
    Limiting losses, however, was a well-subscribed French bond auction, as well
as upbeat data from the U.S., where jobless claims fell by more than expected
last week and where private sector employment rose by much more than expected in
December.   	
    "Stress indicators for the money markets and for liquidity conditions are
all worse again (so) industrial metals are vulnerable," said Credit Suisse
analyst Tobias Merath.	
    "If you have a car (making) company, you need aluminium and you need to
finance it somehow. If banks are deleveraging then the concern is that this is 
not going to work as it used to, financing metals is getting harder."   	
    The European banking sector has been heavily affected by the euro zone
sovereign debt crisis and by stringent regulation requiring banks to hold higher
amounts of liquidity.   	
    The CEO of Italy's largest bank, Unicredit, sought to reassure investors
over the bank's heavily discounted 7.5 billion euro ($9.68 billion) rights issue
as the share price suffered a second day of steep falls.  	
    On a slightly more upbeat note, demand was strong at a French bond auction
earlier despite concerns the country could lose its AAA credit rating, though
borrowing costs rose slightly as the country sold debt for the first time this
year. 	
    "The situation in Europe is still precarious at best," said RBC Capital in a
research note. "Unless the Chinese surprise us with further easing of bank
reserve requirements, base metals look set to underperform through the Lunar New
Year Holidays."  	
    	
    ALUMINIUM SURPLUS	
    Aluminium closed down 1.93 percent at $2,036 a tonne, compared with
a last bid of $2,064 on Wednesday.  	
    News that Rio Tinto Alcan has declared force majeure on aluminium output
from two of its smelters in Canada, due to separate operational and labour
issues, failed to lift aluminium prices. 	
    "Those two smelters are too small to have an impact on the aluminium
market," said Commerzbank analyst Daniel Briesemann.	
    "Aluminium is in such an oversupply that a couple of smelters closing for a
couple of weeks shouldn't be worrying."	
    Bankrupt primary aluminium producer ZALCO is in talks with eight potential
buyers for a takeover of part or all of its plant in Zeeland, the Netherlands,
the company's receiver said late on Wednesday.    	
    Tin closed up 1.02 percent at $19,805 from $19,605, while zinc
, used to galvanize steel, closed down 1.93 percent at $1,833 from $1,869
at Wednesday's close.	
    Battery material lead ended down 2.67 percent at $2,005 from $2,060,
and nickel ended down 0.80 percent at $18,650 from $18,800.	
 Metal Prices at 1715 GMT
                                                                           
  Metal            Last      Change  Pct Move   End 2009   Ytd Pct
                                                              move
 
  LME Alum      2035.00      -41.00     -1.97    2230.00     -8.74
  LME Cu        7539.00       -1.00     -0.01    7375.00      2.22
  LME Lead      2005.00      -55.00     -2.67    2432.00    -17.56
  LME Nickel   18650.00     -150.00     -0.80   18525.00      0.67
  LME Tin      19850.00      245.00     +1.25   16950.00     17.11
  LME Zinc      1833.00      -36.00     -1.93    2560.00    -28.40
  SHFE Alu     15960.00       45.00     +0.28   17160.00     -6.99
  SHFE Cu*     56060.00      270.00     +0.48   59900.00     -6.41
  SHFE Zin     14865.00       90.00     +0.61   21195.00    -29.87
 ** 1st contract 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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