Jan. 29 (Bloomberg) -- Copper headed for its longest losing streak in seven weeks and aluminum dropped to the lowest level in more than a month as China, the world's biggest metals consumer, stepped up measures to prevent asset bubbles.

Zinc slumped to a two-month low and lead declined to its lowest price in four months. China's banking regulator told lenders to step up scrutiny of property loans, while pledging to satisfy "reasonable" financing needs. The central bank this month raised the amount of deposits banks must hold in reserve, after guiding three-month and one-year bill yields higher.

"Prices rose last year in anticipation of improved demand this year," said Zhang Sida, analyst at Shanghai Continent Futures Co. "With China moving to tighten credit and the U.S. dollar remaining resilient, metals will be in a bit of a downtrend as investors mull a W-shaped recovery."

Copper for three-month delivery on the London Metal Exchange dropped as much as 2.6 percent to $7,040.25 a metric ton, and traded at $7,096 at 11:14 a.m. in Singapore. The metal, often used as a gauge of economic activity, is down 3.8 percent this month. It is poised for its worst January performance since 2007 as China takes action to curb record lending that helped more than double copper prices last year.

March-delivery copper on the Comex division of the New York Mercantile Exchange was little changed after dropping 3.5 percent yesterday, the most in four months. The May-delivery contract on the Shanghai Futures Exchange fell as much as 4.2 percent to 57,050 yuan ($8,357) a ton, the lowest price since Dec. 24, before trading down 3.3 percent at 57,580 yuan.

Property Curb

"The curb on property loans will affect the construction industry and therefore metals," said Zhang. "Investors are now unsure if consumption will be as robust as initially expected come the typically strong demand season in March and April."

Banks should "strictly" follow real estate lending policies, the China Banking Regulatory Commission said yesterday in a statement on its Web site after a quarterly assessment of the nation's economic and financial situation. It repeated a call for banks to "reasonably control" lending growth.

Aluminum for three-month delivery dropped as much as 2.4 percent to $2,127 a ton, the lowest level since Dec. 9, before trading at $2,133. Zinc slumped as much as 2.4 percent to $2,182 a ton, a level not seen since Nov. 27 and lead fell as much as 3.8 percent to $2,045 a ton, the lowest price since Sept. 14.

The dollar advanced for a third day today against a six- currency basket, weighing on metals prices. The greenback rose to a six-month high against the euro on speculation the Federal Reserve will relax its low-interest rate stance amid signs the U.S. economy is gathering momentum.

Nickel dropped 1.5 percent to $17,925 a ton and tin declined 0.8 percent to $17,700 a ton.