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- Dubai 05:28 06:47 12:13 15:10 17:33 18:51
Copper is heading for further decline on concern that the pace of the global economic recovery is slowing as job losses rise in the United States and budget deficits widen in Europe.
The metal is about $120 away from entering a bear market under the rule of thumb used by some investors of a 20 per cent drop from a high. The MSCI World Index of equities has lost 6.3 per cent in 2010 and oil is down 8.1 per cent.
Copper for March delivery declined 5.8 cents, or two per cent, to $2.821 a pound last week on the New York Mercantile Exchange's Comex unit. The contract slid as low as $2.811, the lowest intraday price since October 15. Copper for three-month delivery fell 2.3 per cent to $6,245 a metric tonne on London Metal Exchange.
Prices are down 15 per cent this year on the LME and 18 per cent below the latest peak of $7,660 a tonne on January 6.
Copper dropped in New York and London, heading for a fourth weekly decline, on concern that the pace of the global economic recovery is slowing as job losses rise in the US and budget deficits widen in Europe.
US first-time claims for unemployment insurance rose to the highest level in seven weeks, the Labor Department said. The US Dollar Index climbed to the highest level since July yesterday amid concern that swelling budget gaps will hamper Europe's recovery. A stronger dollar makes metals priced in the currency more expensive in terms of other monies.
"Commodities were trading too high relative to the economic environment," said James Parsons, a fund manager at BlueCrest Capital Management in London. "At what levels prices will be supported, I don't know."
Copper more than doubled last year as Chinese imports of the metal climbed to a record in the first half. Steps to curb bank lending in the country are a concern for investors along with sovereign creditworthiness in Europe, said Parsons.
Chinese banks curbed lending last month as the government sought to cool economic growth and inflation. Copper for May delivery on the Shanghai Futures Exchange tumbled as much as 4.8 per cent to 51,360 yuan a tonne, the lowest level since November 13, and closed at 51,880 yuan.
The dollar added as much as 0.5 per cent against the euro. The rebound "was a trigger for selling across the commodity complex", Anne-Laure Tremblay, an analyst at BNP Paribas in London, wrote in an e-mailed report.
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