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Copper Leads Metals Lower After U.S. Housing Starts Slump 10%
Jun 17,2010 10:54CST
industry news

June 17 (Bloomberg) -- Copper declined for a second day after a drop in U.S. housing starts signaled slower demand for industrial metals. Zinc and nickel also fell.

Three-month copper on the London Metal Exchange fell as much as 1.8 percent to $6,530.25 a metric ton, and traded at $6,558 at 9:55 a.m. in Singapore. Futures in Shanghai resumed trading today after a three-day holiday, gaining as much as 2.5 percent to 52,680 yuan ($7,713) a ton.

U.S. housing starts fell 10 percent, the biggest decline since March 2009, following the expiration of a government tax credit, according to a report yesterday. Building permits, a sign of future construction, declined to a one-year low, according to the Commerce Department.

As long as " data keeps coming out that doesn't support the recovery story, we're going to see a lid on prices," said Yang Wenhu, an analyst at CES Futures Brokerage Co. There was also concern that the European situation isn't resolved, said Yang, referring to the region's fiscal crisis.

Copper, seen by some investors as a gauge of economic activity as it is used in construction and transport, has lost 11 percent this year on concern Europe's debt crisis, which began in Greece, will derail the economic recovery.

Construction accounts for a quarter of copper demand, according to the Copper Development Association. Builders are the biggest users of the metal in the U.S., the world's second- largest consumer after China.

"Shanghai's markets are just catching up with the advance made in international prices while China was on holiday," said Yang. London copper gained 3.1 percent on June 14 and 15, before dropping 0.5 percent yesterday.

Metals also declined today as the dollar climbed for a second day against a six-currency basket including the euro and yen, on speculation that European Union leaders will agree on ways to tighten financial-market regulation at a summit today.

Aluminum in London fell 1.2 percent to $1,982 a ton, zinc shed 2.4 percent to $1,785 a ton, and lead dropped 1.4 percent to $1,735 a ton. Nickel declined 1.7 percent to $19,700 a ton, while tin was unchanged at $17,800 a ton.

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