Feb. 23 (Bloomberg) --Copper declined from London to New York on concern that escalating geopolitical tensions may derail the global economic recovery. The metal had its biggest drop in almost seven weeks in Shanghai.
Three-month copper on the London Metal Exchange fell for a third day, by as much as 0.7 percent, to $9,514 a metric ton, and traded at $9,541.75 at 10:51 a.m. in Singapore. The contract tumbled 2.3 percent yesterday, the most in a month. All six LME metals declined, paced by a 1.1 percent drop in lead.
"Metals are being dragged lower by the risk aversion seen in the other financial markets,” said Li Peiying, an analyst at Essence Futures Co. "With the oil price suddenly jumping, the issue of inflation is once again brought to the fore.”
May-delivery copper on the Shanghai Futures Exchange lost as much as 2.4 percent, the most since Jan. 7, to 71,800 yuan ($10,908) a ton. Futures in New York fell as much as 0.7 percent to $4.3320 a pound.
Oil traded near highest level in more than two years, as violence intensified in Libya, raising concern that supplies will be disrupted as turmoil spreads through the Middle East and North Africa.
"If high oil prices persist, governments around the world may be more friendly towards raising interest rates,” said Zhang Xuechuan, an analyst at Huachuang Securities Co. "It’s the excess of liquidity that drove the recent rally in copper -- prices could still go higher even after China raised interest rates because monetary policy in the U.S. remains loose.”
China’s central bank on Feb. 18 announced an increase in reserve requirement ratios for a second time this year, 10 days after it raised interest rates for a third time in four months. The U.S. Federal Reserve has left its key rate at zero to 0.25 percent since December to support the economy.
Lead in London fell 1.1 percent to $2,538 a ton, zinc shed 1 percent to $2,464 a ton, and nickel decreased 0.5 percent to $28,500 a ton. Tin dropped 0.8 percent to $31,400 a ton, and aluminum was little changed at $2,525 a ton.