Copper slides 1.9 pct on weak US economic data

LONDON - Copper prices fell on Friday as a flurry of economic data from the United States, although not as bad as some had feared, still pointed to a severe slowdown and investors worried about metals demand.

By (Reuters)

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Published: Fri 1 Aug 2008, 10:41 PM

Last updated: Sun 5 Apr 2015, 11:47 AM

Metal prices shrugged off the rebound in oil, which together with a firmer dollar, had capped prices earlier in the session as many index-based funds buy or sell commodity baskets.

"The U.S. is on the verge of recession which is negative for all metals because they are so closely linked to the economic performance," analyst Eugen Weinberg at Commerzbank said.

London Metal Exchange copper -- often seen as a key gauge for real economic activity -- traded at $7,910 a tonne by 1528 GMT from $8,060 at Thursday's close.

"The metals will stay in a downward trend -- there is great potential for copper to go down further if we close below $8,000 per tonne," Weinberg said.

Lead touched an intra-day low of $2,115 a tonne, down 4.3 percent, after a rise in LME stocks encouraged some investors to lock-in profits following strong gains over the past month.

Lead was last at $2,130 a tonne from $2,210 on Thursday.

Stocks at LME warehouses increased by 1,250 tonnes to 92,250, having fallen by almost 9 percent in July.

Tin hit $21,500, down 3.2 percent, before trading at $21,700 down against $22,200 on Thursday.

Traders said investors were taking home profits with the metal gaining 32 percent this year -- the best LME performer.

"The metal has faced some downward pressure after trading below $22,000, but it should stay well supported above $20,000," Weinberg said.

the US in trouble

The U.S. unemployment rate climbed to 5.7 percent in July, its highest in more than four years as employers cut payrolls for a seventh month in a row, though less severely than predicted, according to a government report.

"The economy has not created enough jobs to match demand since the onset of the banking crisis 12 months ago," said economist John Kemp at RBS Sempra in a research note.

Rising prices of motor fuels and other cost increases should lead to a further slowdown in consumer spending in the second half of 2008 and lasting into the first half of 2009 unless there is a substantial reduction in oil prices, he said.

"The economy looks set to slow further over the next 6-12 months."

U.S. factory activity was unchanged in July from June while inflation pressures moderated, according to a report.

The Institute for Supply Management said its index of national factory activity edged lower in July to 50.0 from 50.2 in June.

Earlier in the session a firm dollar dampened sentiment by making dollar-priced metals more expensive for holders of other currencies, but later it trimmed gains.

Negative sentiment in commodity markets over the past month can be seen in the performance of indices such as the S&P GSCI and the Reuters-Jeffries CRB Index.

Aluminium tracked copper lower and the metal used in packaging, construction and transport, traded at $2,933 a tonne from $2,980 on Thursday.

China is considering imposing a 5 percent tax on exports of unwrought aluminium alloy as early as in September to reduce exports of the metal

Zinc traded at $1,860 a tonne from Thursday's last bid at $1,915 a tonne and nickel at $18,450 from $18,350.

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