May 14, 2010
Copper fell in London, paring a weekly climb, on a stronger dollar and on concern that Europe’s sovereign-debt crisis will hamper economic growth.
The U.S. Dollar Index, a six-currency gauge of the greenback’s strength, rose and headed for a fourth straight weekly advance. The crisis is “deepening,” Chinese Premier Wen Jiabao said yesterday, after Portugal said it will raise taxes to help narrow its budget deficit more quickly than planned to fight contagion from Greece’s fiscal woes.
“Metal markets are being largely driven by fluctuations in risk appetite and currency gyrations,” said Daniel Major, an analyst at Royal Bank of Scotland Group Plc in London. “The stronger dollar and a fresh bout of risk aversion are likely to be largely responsible for declines in prices.”
Copper for delivery in three months fell $142, or 2 percent, to $7,018 a metric ton at 10:19 a.m. on the London Metal Exchange, cutting this week’s gain to 1.1 percent. Futures for July delivery dropped 1.5 percent to $3.1815 a pound on the Comex in New York. All of the six main metals traded on the LME retreated, led by nickel.
LME copper has slid 4.8 percent this month on concern that planned austerity steps in Europe may do too little to stem the potential spread of the Greek crisis, possibly slowing the region’s economic recovery. Europe consumes 20 percent of global copper output and 15 percent to 25 percent of aluminum, zinc, nickel and lead production, according to Barclays Capital.
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