LONDON, June 23 (Reuters) - Copper fell on Wednesday as the dollar rose and U.S. data showed that sales of new homes in the world's largest economy had fallen by more than expected to a record low.
Copper CMCU3 for three months delivery on the London Metal Exchange closed at $6,520 a tonne. The metal, widely seen as a gauge of economic growth, closed at $6,610 on Tuesday.
"A weak figure on the home sales is another bearish factor for metals," RBS Global Banking & Markets analyst Daniel Major. "New housing stats last week were weaker than expected, and existing home sales were also weaker than expected, so this could compound the overall weakness."
Sales of new single-family homes tumbled to a record low in May as a boost from a popular tax credit faded, adding to fears of a slowing economic recovery. Copper is used extensively in construction.
The dollar extended gains against the euro following the U.S. housing data and ahead of a decision on interest rates from the U.S. Federal Reserve. A stronger dollar makes metals priced in the U.S. currency more expensive for holders of other currencies. [FRX/]
The Federal Reserve, in a statement due at 1815 GMT, is widely expected to hold rates near zero and reaffirm its commitment to keeping interest rates exceptionally low for an
I don't expect any surprises," Major said. "I think their main objective is to keep things on an even keel, especially with the skittish sentiment at the moment."
Zinc CMZN3, used to galvanise steel, bucked the trend, closing at $1,830 a tonne from $1,793 on Tuesday.
"There's some short covering going on in zinc, pushing prices higher," Capital Markets trader Randy North said. Some traders said liquidity was lower than usual as the World Cup in South Africa subdued activity.
Aluminium CMAL3 closed at $1,942 a tonne from $1,949. Stocks of the metal in LME warehouses rose 6,325 tonnes, bringing the total to 4.46 million tonnes, around 200,000 tonnes short of a record high struck in January.
The bulk of the material is said to be tied up in financing deals to release cash for producers and earn higher returns for banks. That makes the nearby market tight, despite high inventories.
Battery material lead CMPB3 closed at $1,815 a tonne, versus $1,828 a tonne, while tin CMSN3 closed at $17,850 a tonne from $18,150. Nickel CMNI3 was at $19,275 from $19,650.