Copper Drops as Oil's Tumble on Libyan Peace Plan Report Hurts Commodities

Mar.3 (Bloomberg) --Copper dropped from London to New York, tumbling alongside other commodities, after a report of a peace plan for Libya triggered a slump in oil.

Three-month copper on the London Metal Exchange fell as much as 0.7 percent to $9,817 a metric ton, and traded at $9,846 at 3:27 p.m. in Singapore. Futures on the Comex in New York declined as much as 0.6 percent to $4.4705 a pound.

Venezuelan President Hugo Chavez and Libyan leader Muammar Qaddafi discussed a plan to mediate the unrest in the North African country, the Wall Street Journal said today. The plan is being studied by the Arab League, Al Arabiya TV said, citing Secretary-General Amr Moussa. Oil tumbled the most in a week.

"The sudden drop in oil prices dragged all the other commodities down,” said Wu Pengfei, an analyst at Shanghai Liangmao Futures. "It’s a knee-jerk reaction and investors are likely to stay sidelined until the situation becomes clearer.”

May-delivery copper on the Shanghai Futures Exchange dropped as much as 1.1 percent to 73,860 yuan ($11,244) a ton.

The drop in oil prices also triggered losses in gold as demand for an inflation hedge cooled. The precious metal fell from a record $1,440.32 an ounce reached yesterday, losing as much as 0.8 percent, the most in a week, to $1,423.53 an ounce.

Aluminum in London fell 0.3 percent to $2,595.50 a ton, lead lost 0.2 percent to $2,560 a ton and tin decreased 0.3 percent to $31,500 a ton.

Zinc and nickel were little changed at $2,482.25 a ton and $28,640 a ton, respectively.