SHANGHAI, June 25 -- Copper dropped in London, trimming a weekly gain, as signs of a slowdown in the global economic recovery offset expectations of a stronger yuan and a weaker dollar. Zinc also declined.
Three-month delivery copper fell as much as 1.2 percent to $6,612 a metric ton on the London Metal Exchange and traded at $6,620 at 12:11 p.m. in Singapore, trimming its gain this week to 3.1 percent. Zinc plunged as much as 1.9 percent to $1,840 and last traded at $1,847.
Purchases of new homes in the U.S., the second-largest copper consumer, fell in May to the lowest level on record after a tax credit expired. Sales of existing houses declined, while economists had predicted a gain, data showed this week. The dollar weakened as the Fed kept interest rates near zero to support growth and as China signaled an end to the yuan's fixed rate to the greenback.
"We expect metals to resume a downturn as support from dollar weakness and yuan strength fades," Zhou Hualiang, an analyst at Shenhua Futures Co., said from Shenzhen today.
Copper advanced by as much as 4.6 percent on June 21, the most since May 18, after the People's Bank of China signaled an end to the yuan's fixed rate to the dollar, making commodities priced in other currencies less expensive for Chinese consumers.
'Resistant to Declines'
The metal, used in wires and pipes, is still almost 20 percent off an April peak on concerns that the global economic recovery may slow, hurting demand.
Copper for September delivery in Shanghai slid as much as 0.8 percent to 53,100 yuan ($7,818) a ton and traded at 53,150 yuan at the midday break. Shanghai aluminum dropped 0.3 percent to 14,835 yuan and zinc fell 1.8 percent to 15,075 yuan.
"Copper will be more resistant to declines as China relies on overseas supplies for the metal whereas it mines and makes a lot of aluminum and zinc itself," Zhou said.
Aluminum in London declined 0.5 percent to $1,955 a ton, lead lost 0.8 percent to $1,805 a ton, nickel was 0.3 percent down at $19,350 a ton and tin was unchanged at $18,150 a ton.
Japan's shipments of rolled-aluminum products climbed 20 percent in May, a sixth straight month of growth, as the economic recovery boosted demand. Supplies to the domestic and export markets increased to 165,638 metric tons from 138,503 tons a year earlier, the Japan Aluminium Association said in a statement today.