NEW YORK/LONDON, Jan 21 (Reuters) - Copper prices ended sharply lower on Thursday, hitting a three-week low as the dollar rose and U.S. equity markets fell after President Barack Obama proposed rules aimed at reducing risky trading at banks.
Earlier, prices were knocked down after strong Chinese growth data fueled concerns over potential monetary tightening in the world's biggest consumer.
Benchmark copper MCU3 on the London Metal Exchange fell to $7,220 a tonne, its lowest since December 24. The metal used in power and construction ended the kerb at $7,265 from $7,375 on Wednesday.
On the New York Mercantile Exchange's COMEX division, benchmark copper for March delivery HGH0 lost 6 cents, or 1.79 percent, to $3.2950 per lb, after sinking to a 3-week low at $3.2815.
The dollar rose to near 6-month highs against the euro, which was hit by Greece's swelling budget deficit. [USD/]
"There is a negative correlation between commodities and the U.S. dollar," said Eugen Weinberg, an analyst at Commerzbank.
He added that further dollar strength during the year will dampen investor enthusiasm for commodities.
Dollar strength makes commodities priced in the U.S. currency costlier for non-U.S. investors. [USD/]
Meanwhile, Wall Street tumbled on Thursday after U.S. President Barack Obama proposed rules aimed at making the financial system safer by preventing the biggest banks from taking excessive risks.
Mining stocks were knocked down after Freeport-McMoRan Copper & Gold Inc (FCX.N) posted a quarterly profit, reversing a year-ago loss, but forecast lower copper and gold production this year.
Data showed that China's annual gross domestic product surged 10.7 percent in the fourth quarter, with analysts saying it was only a matter of time before Beijing took more monetary policy steps.
"We've entered a sort of glass half empty period in the last week or so. The Chinese numbers were great but people are focusing on the tightening in China," said David Thurtell, analyst at Citigroup.
Concerns that Beijing will step in to tighten credit have triggered flight-to-quality buying into the dollar this week, weighing on metals.
"Obama's announcement didn't help either", said Bill O'Neill, partner of LOGIC Advisors in Upper Saddle River, New Jersey, referring to potential monetary tightening in China and dollar's rise.
Weak demand for copper outside China was highlighted by a jump of copper stocks in LME warehouses of 8,000 tonnes to 534,650 tonnes, the highest total since February last year.
"I think we'll stick (near term) in ranges traded since mid-November," said Citigroup's Thurtell.
Aluminum MAL3, used in transport and packaging, fell to $2,218 a tonne, the lowest since December 17. It closed at $2,238 a tonne from $2,267 on Wednesday.
Aluminum stocks hit a record high, rising 18,525 tonnes to 4.64 million tonnes, but analysts said most of the stock remains tied up in financing deals, which could leave the market short of material, should demand improve.