* China property fears send ShFE copper to over-3-month low
* Rise in new housing prices decelerates in January
* Banks start to tighten lending to property sector -media
(Updates with closing prices)
By Susan Thomas and Harpreet Bhal
LONDON, Feb 24 Copper fell on Monday to its
lowest in more than two weeks as data showed growth in new
housing prices in China slowed in January and worries about
credit restrictions in the country's huge property sector hurt
the demand outlook for metals.
China accounts for more than 40 percent of global
consumption of copper, which is used extensively in construction
and power cables. Any curbs to financing and property
development are likely to erode that demand.
Three-month copper on the London Metal Exchange
ended at $7,077 a tonne, down from a close of $7,155 on Friday.
Earlier in the session it hit an intraday low of $7,033, its
lowest since Feb. 6.
New housing prices in China rose 9.6 percent in January from
a year earlier, but the rate decelerated month-on-month for the
first time in just over a year.
"That was the main reason why we saw weakness in copper but
also across the board in base metals," Vicky Sanders, head of
analytics sales at Marex Spectron, said. "It was only a small
change month-on-month but it's really about momentum."
Furthermore, she said, local news reports suggested that
banks had started to tighten lending to the property sector and
The official Shanghai Securities News reported on Monday
that Industrial Bank and other banks may have
stopped extending some loans to property developers and
tightened lending to other property-related sectors such as
steel, cement and construction.
Local media reported that several banks had issued denials.
Copper prices have traded in a narrow range just above
$7,000 per tonne since August, and traded in a $200 range for
most of February.
"Base metals have been relatively tepid since August last
year. So volatility will attract activity and it's good to see
some response in base metals," Sanders said.
"In copper, we're still at the lower range of what we've
been in, but if we were to break through $7,000 then we might
see volumes pick up within days."
Tighter monetary policies in China and the United States
have fanned concerns there will be less cheap liquidity on hand
for industry and investors, compounding worries that stuttering
growth in the world's top two economies could derail a global
In the United States, growth in the services sector as well
as the pace of hiring slowed in February, an industry report
showed on Monday, the latest data to suggest an unusually cold
winter was dragging on economic activity.
"Although developments in China continue to be the main
focus of the metals markets, the geopolitical turmoil evident in
a number of emerging markets still has the potential to generate
additional volatility in the weeks ahead," said Ed Meir, analyst
at INTL FCStone.
Metals prices could still climb, however, driven by
technical buying, Barclays said in a research note.
"Sizeable short positions have built in copper, zinc and
nickel, leaving the market vulnerable to short-covering rallies
and raising the prospect of big rises in reported inventories if
metal is attracted on-warrant by tightening in time spreads,"
the bank said in the note.
In industry news, some big aluminium producers have pushed
up their proposed premiums on primary metal to Japanese buyers
by 45-47 percent to a record $370-$375 per tonne for April-June
shipments, four sources involved in quarterly pricing talks
LME benchmark three-month aluminium ended at $1,762
a tonne from a last bid on Friday of $1,770.
Zinc closed at $2,041 from $2,040 on Friday and lead
ended at $2,132 from $2,150. Both metals hit their
lowest levels in almost two weeks in intraday trade.
Tin closed at $22,975 from $23,140 and nickel
ended at $14,330 from $14,365. Both metals earlier hit
their lowest levels in more than a week in intraday trade.
Three month LME copper
Most active ShFE copper
Three month LME aluminium
Most active ShFE aluminium
Three month LME zinc
Most active ShFE zinc
Three month LME lead
Most active ShFE lead
Three month LME nickel
Three month LME tin
($1 = 6.0914 Chinese yuan)
(Additional reporting by Melanie Burton in Sydney; editing by
Jason Neely, Keiron Henderson and David Evans)