NEW YORK/LONDON, June 29 (Reuters) - Copper crumbled over 5 percent to a one-week low on Tuesday as weak U.S. economic data, worries over European bank financing and concerns over growth in China combined to dash hopes for a swift recovery.
Copper for September delivery HGU0 on the COMEX metals division of the New York Mercantile Exchange plunged 15.90 cents, or 5.2 percent, to close at $2.9305 per lb, its lowest level on a settlement basis since June 18.
On the London Metal Exchange, benchmark copper for three-month delivery CMCU3 shed $375, or 5.5 percent, to close at $6,494 a tonne, near its session low of $6,476.
Exceeding copper's losses, zinc CMZN3 fell 7 percent to a more than one week low of $1,745, lead CMPB3 slipped 8 percent to a more than one week low of $1,710, nickel dropped 7 percent to a more than two week low of $19,050, while tin lost 4 percent to a
one week low of $17,450.
Bart Melek, Global Commodity Strategist with BMO Nesbitt Burns in Toronto, believed a sharp downward revision in China's leading economic indicator index for April was a main catalyst behind the steep sell-off in the complex.
"I certainly think that was a trigger," he said. "The implication is that demand growth for copper, zinc and other base metals will be somewhat weaker ... the expectations we
had in the beginning of the year are coming down."
China is the world's largest consumer of industrial metals. That weaker economic outlook spawned widespread risk aversion across the broader market, dragging the Shanghai Composite .SSEC down over 4 percent.
Data from the United States spurred further doubts about the strength of the recovery. U.S. consumer confidence fell steeply in June after rising for three months, due to a recent slowdown in jobs growth, according to a private sector report released earlier.
"This reads to me as economic trouble beginning to brew," said Sterling Smith, analyst for brokerage Country Hedging Inc in St. Paul, Minnesota.
"The drop in copper is particularly notable, given its position as a leading economic indicator. What we've lost on this market today tells me we're looking at further headwinds ahead, if not a double-dip recession in the United States."
U.S. stock markets dropped 2 percent after the weak consumer confidence data, while the dollar extended gains versus the euro following the data.
A weak euro makes metals costly for European investors.
Europe's financial crisis remained a concern for investors. Banks are due to repay nearly half a trillion euros to the European Central Bank on Thursday, leaving a potential liquidity
shortfall of over 100 billion euros.
Inventory levels also remained in focus for investors looking for signs of improving demand. Copper stocks fell 1,225 tonnes to 451,950 tonnes, having hit their highest level since October 2003 at 555,075 on Feb. 17.
"Base metals prices fall on market concerns and may fall further as lower equity price levels indicate lower economic growth," said investment bank Fairfax in a note.
"The fear that demand in China is poised to fall significantly is further helping to subdue the (copper) price."
Aluminum CMAL3 ended at $1,950 a tonne versus $2,029. LME stocks for the metal, used in transport and packaging, eased 7,075 tonnes to 4.43 million tonnes, down from record peaks at 4.64 million touched in late January.
Nickel CMNI3 tumbled $1,530 to end at $19,075 a tonne, lead CMPB3 closed down $140 at $1,720, zinc CMZN3 down $137 at $1,743, while tin CMSN3 finished at $17,600, down $650 on the day.