December 3, 2014 / 9:19 AM / in 6 years

METALS-Copper slips on dollar strength, demand uncertainty

* Euro drops to 27-month low against the dollar

* China services sector PMIs show quickening Nov growth

* U.S. Nov ADP report shows softer than expected jobs growth (Updates prices, changes dateline, previous KUALA LUMPAR)

By Harpreet Bhal

LONDON, Dec 3 (Reuters) - London copper edged lower on Wednesday, under pressure from dollar strength and uncertainty over demand for industrial metals, although falls were limited by data showing the services sector in China grew marginally faster in November.

A buoyant U.S. dollar contributed to a fall in the euro to its weakest level in more than two years, which put pressure on metals prices. A strong dollar makes commodities priced in dollars more expensive for holders of other currencies.

“Among the base metals, the strength of the dollar has more of an effect on copper, because copper has typically been used by investors as more of an investment asset compared to many of the other metals,” Nic Brown, head of commodities research at Natixis, said.

Three-month copper on the London Metal Exchange (LME) fell 0.4 percent to $6,390 a tonne in official trading.

The metal, which is used in power and construction, fell to a 4-1/2 year low of $6,230.75 a tonne on Monday, tracking a slide in oil prices. It is down more than 13 percent in the year to date.

Share prices in Asia edged lower on Wednesday, while Brent prices rebounded towards $71 a barrel.

Helping to prevent further falls, China’s services sector grew marginally faster in November, surveys showed, a welcome respite after a run of underwhelming data from the world’s top copper consumer as it faces its worst slowdown in at least six years.

But analysts said credit difficulties in China were keeping bargain-hunting in check.

“It just seems like there is so much less activity because of the credit constraints in China,” Morgan Stanley analyst Joel Crane in Melbourne said.

Premiums for copper in bonded warehouses in China were stagnant at $60 a tonne, suggesting consumers have not rushed to purchase metals after prices fell. CU-BMPBW-SHMET

In other metals, aluminium fell 0.6 percent to $1,967 a tonne.

The metal fell to a 5-1/2-week low of $1,956 a tonne in intraday trade, driven by stop-loss sales after prices pierced key support. Traders also said the December options expiry was influencing prices.

In official rings, zinc was at $2,200 a tonne, down 0.5 percent, lead was at $2,021 a tonne, down 0.3 percent, and nickel was at $16,410 a tonne, up 0.4 percent.

Three-month tin was untraded in rings.


Three month LME copper

Most active ShFE copper

Three month LME aluminium

Most active ShFE aluminium

Three month LME zinc

Most active ShFE zinc

Three month LME lead

Most active ShFE lead

Three month LME nickel

Three month LME tin (Additional reporting by Melanie Burton in Sydney and Jan Harvey in London. Editing by Jane Merriman and David Evans)

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