METALS-Copper falls with euro, demand questioned

Thu Mar 4, 2010 5:22pm EST

 * Dollar strengthens against euro after ECB comments
 * LME copper stocks tumble
 * Coming up: U.S. non-farm payrolls data due Friday
 (Recasts, updates prices, market activity to New York close;
changes byline, dateline, previously LONODN)
 By Carole Vaporean
 NEW YORK, March 4 (Reuters) - Copper ended lower on
Thursday as the euro gained against the dollar, mixed U.S.
economic readings put demand in question and funds sold metals
across the board.
 Benchmark copper for three-month delivery CMCU3 on the
London Metal Exchange ended sharply lower at $7,370 a tonne
from $7,580 on Wednesday.
 In New York, most active copper for May delivery HGK0
fell 5.95 cents, or 1.73 percent, to finish at $3.3755 per lb
on the New York Mercantile Exchange's COMEX division.
 The euro's descent on the dollar sparked metal sales across
the board. The euro dropped after Europe's central bank chief
said recovery would be uneven, reducing chances of a near-term
rise in record low euro zone interest rates. [USD/]
 "Copper had a sell-off, accompanied by the rest of the
metals, I think predominantly based on the statements from the
ECB on not raising rates. That hit the euro and put a cap on
all the metals," said Frank McGhee, head precious metals trader
with Integrated Brokerage Services LLC in Chicago.
 Dollar-denominated copper tends to fall when the U.S.
currency rises, making the red metal more expensive for
overseas investors.
 Mixed U.S. economic news also pressured copper. January
reports cast doubt on prospects for economic growth, dimming
hopes for stronger copper demand.
 New orders at U.S. factories rose 1.7 percent in January,
led by a big jump in orders for commercial aircraft, though
contracts for pending sales of previously owned homes fell
unexpectedly.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
 * U.S. PENDING HOME SALES: Story: [ID:nN04154147]  Table:
[ID:nWEQ003825]
 * U.S. FACTORY ORDERS: Story: [ID:nN03257330] Table:
[ID:nCAT005122]
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
 Copper has eked out gains of just 0.6 percent so far this
year, with Chinese buying softening as the world's top base
metals consumer moves to a less accommodative monetary policy
to cool rapid growth. Chinese demand helped copper surge 140
percent in 2009. [ID:nTOE62301C]
 Moreover, Western demand is recovering slowly.
 "There haven't been any particular signs of a very strong
demand recovery in copper or other base metals outside China,"
said Daniel Major, analyst at RBS Global Banking and Markets.
 CHILE QUAKE
 The fall in copper, used in power and construction,
followed a five-week peak in prices on Monday after an
earthquake forced top producer Chile to temporarily shut down
nearly a quarter of its mine capacity.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
 For more on the Chile quake, see [ID:nN28135112]
[ID:nCHILE]
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
 A series of reports from Chile have affirmed that mining
operations are now running with little overall impact, though
some smelters and refineries remained shuttered.
 Chilean-owned top producer Codelco on Thursday reported
quake impact of less than 0.5 percent of annual output.
[ID:nN04136817]
 Traders also watch stock movements for clues on demand
outside China. Thursday showed a steep 6,350-tonne decline to
544,225 total tonnes, near a six-year high.
 Aluminium CMAL3 ended at $2,215 versus $2,210,
steel-making ingredient nickel CMNI3 closed at $22,300 from
$22,845 and tin CMSN3 at $17,250 from a last bid of $17,350
on Wednesday.
 Tin earlier hit a one-month high of $17,850, while nickel
touched $23,040, the highest since June 2008.
 Battery material lead CMPB3 ended at $2,170 from
$2,238.50 and zinc CMZN3 at $2,259 a tonne from $2,320.
 For results from miner Kazakhmys, see [ID:nLDE6220M2].
 (Additional reporting by Pratima Desai, Rebekah Curtis and
Michael Taylor in London; Editing by David Gregorio)


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