SINGAPORE, May 7 -- Copper dropped for a fourth day and headed for its worst week in more than three months as metals slumped on concern Europe's debt crisis may slow the global recovery. Aluminum fell to its lowest level since February.
Copper for three-month delivery declined as much as 2.7 percent to $6,760 a metric ton on the London Metal Exchange, before paring losses to $6,826 at 11:54 a.m. in Singapore as the euro rebounded. Prices dropped 8.1 percent this week, the most since the week ended Jan. 29, on concern a fiscal crisis that began in Greece may spread to other countries in the region.
"We've seen a lot of panic this week as markets continue to be concerned about what's happening in Europe," Yingxi Yu, an analyst at Barclays Capital, said from Singapore today. "Market sentiment is very nervous across all financial markets and the problems in Europe are not likely to go away in the short term."
Aluminum declined as much as 2.3 percent to $2,054 a ton, the lowest price since Feb. 15, and traded at $2,073. Zinc fell as much as 3 percent to $2,049.75 a ton and traded at $2,083.
A 110 billion-euro ($140 billion) aid package to avoid a default by Greece has failed to assure investors. Sovereign debt contagion may spread across Europe, affecting the banking systems of Portugal, Spain and Italy, as well as Greece, Moody's Investors Service said in a report.
U.S. stocks plunged by the most in a year yesterday, briefly erasing more than $1 trillion in market value before paring declines. The euro tumbled the most since the collapse of credit markets in 2008, sending the Dollar Index to its highest level since April 2009. The 16-nation currency climbed to $1.2708 from $1.2620.
August-delivery copper on the Shanghai Futures Exchange lost as much as 3.8 percent to 54,690 yuan ($8,011), the lowest price since Feb. 10, before trading at 55,210 yuan. Shanghai zinc futures slumped briefly by the 5 percent daily limit.
"The drop has everything to do with what's happening in Europe and little to do with fundamentals," said Zhang Hao, an analyst at CITIC Newedge Futures Co. "Futures might get some support at the $6,800 level in London and 55,000 yuan level in Shanghai as physical buyers emerge."
The fundamentals "remain healthy", said Barclay's Yu. "We're getting anecdotal evidence that metals demand is robust," she said.
Nickel, this year's best performer on the London Metal Exchange, headed for its worst week since the collapse of Lehman Brothers Holdings Inc. in 2008. The metal has fallen 18.6 percent this week, the most since the week ending Oct. 10, 2008. The metal fell as much as 4.1 percent to $21,150 a ton, before trading at $21,400 by 11:54 a.m. in Singapore.
Lead declined 1.6 percent to $1,970 a ton and tin dropped 1.1 percent to $17,500 a ton.