Copper Tumbles Most in 10 Months on Mounting European-Debt Woes

Sept. 20 (Bloomberg) –Copper futures tumbled the most in 10 months on speculation that Europe's escalating debt woes will hinder the global economy, eroding demand for industrial metals.

European manufacturing contracted in September for the second straight month, economists said before a report on a purchasing-managers index this week. Europe's economy is cooling as governments extend spending cuts to narrow budget deficits. In China, home prices in all 70 cities monitored rose for the first time this year, the statistics bureau said yesterday.

"China property-price news over the weekend possibly sparked fears of more Beijing tightening, or no loosening, as some may have been factoring in," said David Thurtell, an analyst at Citigroup Inc. in Singapore. "Poor euro-zone manufacturing PMI's would obviously be a bad look" for industrial metals, he said.

Copper futures for December delivery fell 14.9 cents, or 3.8 percent, to settle at $3.7825 a pound at 1:29 p.m. on the Comex in New York, the biggest drop for a most-active contract since Nov. 16. Earlier, the price touched $3.7655, the lowest since Nov. 30. The metal has dropped 15 percent this year.

The euro-zone purchasing managers manufacturing index fell to 48.5 this month from 49 in August, according to the median of 34 economist estimates compiled by Bloomberg News. A reading below 50 indicates contraction. The Markit Economics report is set for release on Sept. 22.

Sixty percent of equity investors see euro-area banking issues as the greatest threat to their markets and 70 percent of currency clients say euro developments will be the most important drivers of their markets, Barclays Capital said, citing a client survey. Europe consumes about a fifth of the world's copper, according to Barclays. China is the biggest buyer.

On the London Metal Exchange, copper for delivery in three months fell $332, or 3.8 percent, to $8,364 a metric ton ($3.79 a pound). Aluminum, lead, nickel, tin and zinc also declined.

Inventories of copper in warehouses monitored by the LME rose 0.7 percent to 469,125 tons, the most since July 27.