METALS-Copper near one-month low as U.S. fiscal talks sour

Thu Dec 20, 2012 12:25pm EST

* Tension rises over stalled U.S. "fiscal cliff" talks
    * Data suggest U.S. jobs growth limited
    * U.S. Q3 GDP growth revised up to 3.1 percent

    By Susan Thomas and Silvia Antonioli
    LONDON, Dec 20 (Reuters) - Copper hit its lowest in almost a
month on Thursday, pressured by deadlock in talks to avert a
fiscal crisis and by weak job data in the United States, but an
upward revision of the country's growth data limited the fall.
    In Washington a political deal to narrow the budget deficit
is needed to avoid a package of mandatory spending cuts and tax
rises set for January, which could throw the world's largest
economy back into recession.
    No progress was made in talks on Wednesday.
    "In the past few days there were hopes that the politicians
would find a solution to the dispute, but overnight the talks
seem to have deteriorated," Commerzbank analyst Daniel
Briesemann said. 
    "So it looks like they won't resolve the issue before the
end of the year, and that's probably weighing on more cyclical
commodities today."
    The tension was expected to rise later on Thursday when the
Republican Party leadership plans to try to pass a bill of its
own in Congress in a move that has already angered President
Barack Obama. 
    Three-month copper on the London Metal Exchange fell
2 percent to close at $7,772 a tonne, down from $7,926 at the
close on Wednesday.
    It sank to its lowest since Nov. 28 at $7,735 earlier in the
session, shortly after data from the United States suggested job
growth remains moderate in the world's largest economy, clouding
the outlook for base metals demand.    
    "The jobless claims data was negative, that's a key factor
for copper today, plus there are nerves over the fiscal cliff,"
VTB Capital analyst Andrey Kryuchenkov said.
    The metal, used in power and construction, was also under 
p ressure f rom traders who rely on reading signals from price
charts after it fell below the $8,000 mark.
    Copper has dipped below its 30-, 100- and 200-day moving
averages, which have converged around $7,877/$7,878.  
    An upward revision of U.S. GDP data for the third quarter
countered some of the doubts over the weakness of the U.S.
economy but was not convincing enough to lift copper prices.
    Gross domestic product expanded at a 3.1 percent annual rate
in the third quarter, the Commerce Department said in its third
estimate on Thursday, up from the 2.7 percent pace reported last
month. 
    "Sure the GDP number being better holds up some promises of
upsides in the U.S. economy but only once the fiscal cliff
negotiations are resolved and that could be today, tomorrow, who
knows," Robin Bhar, an analyst at Societe Generale, said.       
      
    U.S. housing starts data had already fuelled some concerns
about the recovery on Wednesday. Construction is a significant
market for copper, with a little over 400 lb of the metal used
to build a typical U.S. home.    
    
    
    CHINA
    Helping to limit losses in copper, China's manufacturing
sector expanded in December, data showed this month. This has
been reflected in some copper purchases by consumers.
 
    China is the world's top copper consumer, accounting for 40
percent of refined demand last year.
    "From late November to early December, downstream users in
China built up stocks. Demand now is okay, but not very strong,"
said Chunlan Li, a Beijing-based copper analyst with consultancy
CRU.
    In other metals, three-month aluminium, untraded at
the close, was last bid a t $2,0 60 per t onne from $2,085 at the
close on Wednesday.
    Daily average primary aluminium output rose slightly last
month to 67,600 tonnes from 67,200 in October, International
Aluminium Institute data showed on Thursday. 
    Three-month tin, untraded at the close, was last bid
at $23,325 from $23,500 while lead closed at $2,325 from
$2,337.  
    Zinc finished at $2,071 from $2,086 and nickel
 at $17,575 from $17,750.    
    
 Metal Prices at 1710 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       353.10       -6.35     -1.77     344.75      2.42
  LME Alum      2063.25      -21.75     -1.04    2020.00      2.14
  LME Cu        7763.75     -162.25     -2.05    7600.00      2.15
  LME Lead      2323.25      -13.75     -0.59    2034.00     14.22
  LME Nickel   17524.00     -226.00     -1.27   18650.00     -6.04
  LME Tin      23200.00     -300.00     -1.28   19200.00     20.83
  LME Zinc      2067.25      -18.75     -0.90    1845.00     12.05
  SHFE Alu     15250.00      -40.00     -0.26   15845.00     -3.76
  SHFE Cu*     56870.00     -780.00     -1.35   55360.00      2.73
  SHFE Zin     15375.00      -85.00     -0.55   14795.00      3.92
 ** Benchmark month for COMEX copper
 * 3rd contract month for SHFE AL, CU and ZN
 SHFE ZN began trading on 26/3/07
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