METALS-Copper slips on euro zone caution, EU summit eyed
* Markets cautious ahead of EU summit this week * Aluminium at lowest in 2 yrs, zinc lowest since late Oct * COMING UP: U.S. durable goods orders at 1230 GMT By Harpreet Bhal LONDON, June 27 (Reuters) - Copper slipped on Wednesday as growing concern about the euro zone debt crisis prompted caution in the market ahead of a European Union summit that investors fear could fail to materially tackle the region's debt troubles. Three-month copper on the London Metal Exchange (LME) traded at $7,335 a tonne in official rings, down from Tuesday's close of $7,359 a tonne. Hopes that the EU summit could yield any solution to the euro zone debt crisis evaporated after German Chancellor Angela Merkel flatly rejected the idea of common euro zone bonds, even though European Council President Herman Van Rompuy on Tuesday put forward the case for them. "There have been negative headlines surrounding the EU summit with Merkel's comments. It is not really fundamentals that are driving commodity markets at the moment as the macro overlay is putting pressure on prices," Robin Bhar, an analyst at Societe Generale said. "Demand (for base metals) is pretty subdued as we move into the holiday season, and I do expect prices to probe the downside. Copper could push below $7,000 a tonne." The dollar eased from earlier highs and safe-haven German bonds were steady as markets held fire ahead of the June 28-29 summit. "The EU summit later this week is an event risk ahead of which many market participants are likely to remain on the sidelines," Credit Suisse analysts said in a note. "Transferring financial risks and powers to the EU level faces significant hurdles. The markets will be closely watching whether EU leaders at the summit are willing to further the discussion on pooling banking supervision and risks before a fiscal union." Copper was down more than 13 percent for the quarter so far and was trading around 4 percent lower for the year to date. In China, the world's top consumer of copper, users have retreated from physical buying this week, after a brief revival earlier this month, on hopes metal prices would drop further from current levels ahead of a seasonal lull in demand in summer, traders said. ALUMINIUM PRESSURED Aluminium fell to a new low since June 2010 at $1,835 a tonne, mirroring falls in Shanghai aluminium, which dropped to its lowest in more than three years on news China's top aluminium producing province was giving some smelters a discount in their electricity bill, fuelling overcapacity fears. "Investors who were holding a lot of aluminium stocks have been dumping those along with other base metals positions," said a Shanghai-based trader with an international firm. "While things look bad for aluminium, there isn't a particular reason for selling the other metals. I think these investors have been feeling bearish for a while now and the subsidy news gave them an excuse to do so," he added. LME aluminium later recovered to trade at $1,849 in official rings, up from Tuesday's close of $1,845. Other metals also fell to multi-month lows. Zinc dropped to its lowest since late October at $1,745, before recovering slightly to trade at $1,756 in official rings, from Tuesday's close of $1,776. Lead hit its lowest since July 2010 at $1,742 a tonne. It was untraded in official rings, but bid at $1,759 from Tuesday's close of $1,768. Nickel traded at $16,220 from $16,275 a tonne while tin traded at $18,500 from Tuesday's close of $18,560. In industry news, commodities trader Glencore, scrambling to save its $26 billion bid for miner Xstrata, will need to sweeten the terms or put its long-desired deal at risk after key shareholder Qatar threatened to oppose the offer. Metal Prices at 1206 GMT Comex copper in cents/lb, LME prices in $/T and SHFE prices in yuan/T Metal Last Change Pct Move End 2011 Ytd Pct move COMEX Cu 331.05 -0.25 -0.08 344.75 -3.97 LME Alum 1848.75 3.75 +0.20 2020.00 -8.48 LME Cu 7335.50 -23.50 -0.32 7600.00 -3.48 LME Lead 1757.00 -11.00 -0.62 2034.00 -13.62 LME Nickel 16225.00 -50.00 -0.31 18650.00 -13.00 LME Tin 18550.00 -10.00 -0.05 19200.00 -3.39 LME Zinc 1752.25 -23.75 -1.34 1845.00 -5.03 SHFE Alu 15090.00 -10.00 -0.07 15845.00 -4.76 SHFE Cu* 54010.00 80.00 +0.15 55360.00 -2.44 SHFE Zin 14220.00 -95.00 -0.66 14795.00 -3.89 ** Benchmark month for COMEX copper * 3rd contract month for SHFE AL, CU and ZN
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