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Funds News

METALS-Copper prices slide as market confidence crumbles

 * Confidence dwindles after Fed cuts U.S. growth forecasts
 * Aluminum stocks surge to record above 4.17 mln tonnes
 (Recasts, updates with New York closing copper prices, adds
NEW YORK to dateline and analyst comments)
 NEW YORK/LONDON, May 21 (Reuters) - Copper lost as much as 4
percent on Thursday before narrowing losses near the close,
dragged down by a souring of broader market sentiment amid fresh
signs of economic weakness that signaled the road to recovery will
likely be long, arduous and fraught with uncertainty.
 "The weakness today is from the stock market tailing off and
general concerns about whether or not we have another leg down or
a big correction in equities," said Tom Hartman, broker with
Altavest Worldwide Trading in Mission Viejo, California.
 Copper for July delivery HGN9 on the New York Mercantile
Exchange's COMEX division slipped 5.55 cents to settle at $2.0510
a lb, after dealing in a session range between $2.0135 and $2.10.
 On the London Metal Exchange (LME), copper for three-months
delivery MCU3 was last quoted at $4,469/4,470 from $4,640, and
hit a day's low of $4,425.
 "Every time you get a piece of information that shows that
things are worse than expected, I think you're going to see
another leg down in the market," said Zachary Oxman, managing
director with TrendMax Futures in reference to U.S. data that
showed a further deterioration in the labor market.
[ID:nN21222195]
 Copper prices are up about 50 percent since late February when
markets started to believe the worst could be over for the global
economy.
 Economic reports this week suggested otherwise.
 "Negative economic news is outweighing the bear market rally
we've seen in recent months," said John Meyer, an analyst at
investment bank Fairfax.
 "The Japanese (growth) data yesterday was surprising in its
negativity, terrible really ... The market is still digesting this
data."
 Japan's economy shrank at a record 4 percent in the first
quarter as domestic demand and investment buckled, threatening to
crush an anticipated export-led bounce in the second half of this
year. [ID:nT367411]
 Traders said news that ratings agency Standard & Poor's had
lowered its outlook on Britain to negative was adding to the
overall gloomy mood. [ID:nLL627240]
 Also eroding support was expectations that purchases by China,
the world's largest consumer of copper, were coming to an end and
that stocks of the metal in LME warehouses, falling for some
months now, could start rising.
 Copper stocks, which are above 336,000 tonnes, have fallen
about 40 percent since late February and are at their lowest since
late December 2008.
 Material earmarked for delivery, or canceled warrants, now
only accounts for about 15 percent of total stocks from 20 percent
a few weeks ago.
 RECORD ALUMINUM STOCKS
 Aluminum for three-months delivery on the LME MAL3 slid to a
three-week low of $1,442 a tonne after warehouse inventories
surged to a record above 4.17 million tonnes.
 "People are running away from aluminum," Andrey Kryuchenkov,
an analyst at VTB Capital said of the speedy rise in stocks. "If
you look at the pace, it's incredible."
 The metal used in transport and packaging closed at $1,452 a
tonne from $1,493 at the close on Wednesday.
 Analysts said the focus in the market was now turned to nickel
stocks, where about 4 percent of total stocks have been tagged for
delivery.
 "Nickel is seeing decent buying and canceled warrants are
rising as stainless steel mills start to restock," said David
Thurtell, an analyst with Citigroup.
 Three-month nickel MNI3 closed at $12,180 a tonne from
$12,650 at the close on Wednesday, zinc MZN3 was at $1,455 from
$1,518, lead at $1,400 from $1,463 and tin MSN3 was at $13,350
from $13,750.
 Lead hit a day's low of $1,378, its lowest since May 1.
 Metal Prices at 1915 GMT
 Metal            Last      Change  Pct Move   End 2008   Ytd Pct
                                                         move
 COMEX Cu       205.40       -5.45     -2.58     139.50     47.24
 LME Alum      1446.00      -47.00     -3.15    1535.00     -5.80
 LME Cu        4492.00     -148.00     -3.19    3060.00     46.80
 LME Lead      1395.00      -68.00     -4.65     999.00     39.64
 LME Nickel   12170.00     -480.00     -3.79   11700.00      4.02
 LME Tin      13455.00     -295.00     -2.15   10700.00     25.75
 LME Zinc      1451.00      -67.00     -4.41    1208.00     20.12
 SHFE Alu     12765.00       35.00     +0.27   11540.00     10.62
 SHFE Cu*     36050.00     -520.00     -1.42   23840.00     51.22
 SHFE Zin     12710.00     -105.00     -0.82   10120.00     25.59
 ** 1st contract month for COMEX copper * 3rd contract month for
SHFE AL, CU and ZN SHFE ZN began trading on 26/3/07
 (Additional reporting by Rebekah Curtis in London)
 (Reporting by Pratima Desai; editing by Keiron Henderson and
Lisa Shumaker)

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