Copper extends losses after Fed leaves policy on hold
NEW YORK (Reuters) - Copper extended losses in after-hours business on Wednesday, sinking to its lowest in a week, after the Federal Reserve refrained from delivering fresh monetary stimulus despite acknowledging a weakening U.S. economy.
Fed officials described the world's biggest economy as having "decelerated somewhat," a change of tone from its previous assessment in June that the economy had been "expanding moderately."
But the central bank disappointed investors by taking no new measures to stimulate growth.
"If you are looking for demand hope for industrial commodities, you certainly didn't get any new incentive out of what the Fed meeting did today," said Bill O'Neill, partner at LOGIC Advisors in Upper Saddle River, New Jersey.
COMEX copper for September delivery sank an additional 2.95 cents in electronic trade to hit a one-week trough at $3.3455 per lb. It earlier settled the day down 4.25 cents at $3.3750.
London Metal Exchange (LME) benchmark copper ended off $135 at $7,425 a tonne, after touching its lowest level in nearly a week at $7,421.50.
Copper had already come under selling pressure after data showed U.S. and euro zone factory activity stumbled in July and Chinese manufacturing plummeted to an eight-month low.
China's official factory purchasing managers' index fell to 50.1 last month, suggesting the sector was barely growing, while a rival HSBC survey indicated the more market-sensitive private sector was starting to recover.
The data signaled that the private and state-backed parts of China's vast factory sector are stabilizing -- albeit at a relatively low level of growth.
China is the world's biggest copper consumer, accounting for around 40 percent of global demand.
"The data surprised on the downside for China, which isn't positive for metals," said Gayle Berry, an analyst at Barclays Capital.
"But while the market is disappointed with some of the economic data, you're probably not going to see a big selloff, because there is anticipation demand is going to improve due to the Chinese government signaling that it is taking a pro-growth stance."
Chinese home prices broke eight straight months of decline in June in a tentative sign that pro-growth policies are gaining traction.
Market participants are now looking toward China's August PMI figures, which they believe will be a better indicator of the health of the world's second-largest economy.
With the Fed holding back and economic data continuing to disappoint, the pressure is turning up before a key European Central Bank meeting on Thursday, after its president, Mario Draghi, said last week that he would do "whatever it takes to preserve the euro."
"Tomorrow becomes even more important to see what Draghi can pull out of his hat ... does he in fact have anything close to what the market is expecting? I'm very skeptical," LOGIC Advisors' O'Neill said.
On the fundamental front, top miners Rio Tinto (RIO.L) and BHP Billiton (BHP.AX) announced fresh cost-cutting measures to cope with sliding commodity prices and stuttering growth.
Tin ended down $300 at $17,800 a tonne, and zinc fell $22 to close at $1,820 a tonne.
Lead fell $36 to finish at $1,884 a tonne, aluminum dropped $30 to end at $1,861 a tonne, and nickel slumped $315 to close at $15,550.
Traders said Chinese traders were delaying term nickel imports and returning metal at a discount as China's slowing economy and maintenance at major stainless steel mills cut consumption.
(Additional reporting by Harpreet Bhal and Silvia Antonioli in London; Editing by Dale Hudson, Jane Baird, Alison Birrane and Bob Burgdorfer)