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Copper Pares Gains in Asia on Dollar Rebound, China Concerns
Jan 20,2010 13:30CST
industry news

Jan. 20 (Bloomberg) -- Copper was little changed, paring an earlier advance, as the dollar's rebound damped demand for raw materials as alternative investments. Nickel and tin fell.

The dollar rose for a second day against a basket of six major currencies on concern Greece's growing fiscal problems will weigh on the region's economic recovery. Copper also gave up earlier gains on speculation tightening measures in China, the world's largest metals user, will accelerate.

"The dollar and metals have re-established their inverse relationship in recent days and the dollar's strength is weighing on all commodities," said Wang Haifeng, an analyst at Shanghai Liangmao Futures Co.

Copper for delivery in three months on the London Metal Exchange traded little changed at $7,560 a metric ton by 10:25 a.m. in Singapore, after adding as much as 1.1 percent earlier. March-delivery copper on the Comex division of the New York Mercantile Exchange fell 0.3 percent to $3.4380 a pound.

The May-delivery contract on the Shanghai Futures Exchange declined for the first day in three, falling by as much as 0.9 percent to 61,250 yuan ($8,971), before trading at 61,470 yuan. The metal rose as much as 0.7 percent earlier.

Chinese regulators asked some of the nation's banks to limit lending after they failed to meet requirements including those for capital, Liu Mingkang, chairman of the China Banking Regulatory Commission, said in an interview today. China's central bank last week raised the amount of deposits that banks must hold in reserve, following moves to curb lending by guiding three-month and one-year bill yields higher.

Metals had earlier been lifted by optimism about China's economic growth. The country's gross domestic product rose 10.5 percent from a year before, according to the median of 41 forecasts in a Bloomberg News survey. China's record bank loans and stimulus spending helped copper more than double last year.

Among other LME metals, nickel fell 0.9 percent to $19,050 a ton, tin dropped 0.4 percent to $17,900 a ton, while aluminum was little changed at $2,295 a ton. Zinc gained 0.9 percent to $2,525 a ton, and lead climbed 1.1 percent to $2,451 a ton.

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