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Copper Poised for Longest Losing Streak in 21 Months on Europe
May 21,2010 11:58CST
industry news

May 21 (Bloomberg) -- Copper led a decline in industrial metals, heading for its longest weekly losing streak in 21 months, on concern that Europe's debt crisis may derail the global economic recovery, dimming prospects for metals demand.

Copper for three-month delivery on the London Metal Exchange lost as much as 1.3 percent to $6,522 a metric ton, and traded at $6,585.25 at 10:34 a.m. in Singapore, down 4.9 percent this week. The metal, often used as a gauge of economic activity, is set to drop for a sixth week, the longest period of declines since August 2008.

Commodities tumbled this week after Germany banned speculators from some bets against government bonds and banks. Metals extended a rout after an index of U.S. leading economic indicators fell in April for the first time in a year and sales of new homes in Shanghai dropped to a five-year low last week.

"Whatever's happening in Europe is spooking all financial markets," said Wei Hongjie, an Sichuan-based analyst at Chengdu Brilliant Futures Co. "Even if they manage to save Greece with $1 trillion, where are they going to find money to save the next debt-ridden economy and how is this money going to be repaid?"

August-delivery copper in Shanghai lost as much as 2.3 percent to 52,750 yuan ($7,726) a ton, before trading at 53,210 yuan. Futures fell to a three-month low of 51,820 yuan this week on concern that property demand will continue to slide after China raised minimum mortgage rates, restricted pre-sales by developers and tightened controls on purchases of second and third properties.

"The hysteria hasn't reached 2008 levels yet," Wei said, referring to the collapse of Lehman Brothers Holdings Inc. in September 2008. "We could get there if there's no resolution in Europe and its slowdown in growth spreads outside the region."

Aluminum in London fell 0.4 percent to $1,984 a ton, down 5.6 percent this week, zinc dropped 0.6 percent to $1,863 a ton, 9.3 percent lower this week, and lead declined 0.4 percent to $1,738 a ton, down 10.4 percent this week. Nickel slid 0.5 percent to $21,100 a ton, 2.1 percent lower this week, while tin hadn't traded by 9:50 a.m. in Singapore.

The London Metal Exchange's market data feed didn't update for about 35 minutes at the start of Asian trading today. The feed resumed at around 8:35 a.m. Singapore time.

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