METALS-Copper Ends Down on China Measures, Strong Dollar

NEW YORK/LONDON, Jan 20 (Reuters) - Copper fell 2.7 percent on Wednesday, after another move in China to tighten monetary policy fueled worries about demand in the world's biggest consumer and as the euro sank against the dollar. But in spite of the prospect of more tightening measures in China, analysts say Chinese growth data later this week could help restore the bullish sentiment and fade worries about demand for the red metal. 

Benchmark copper for March delivery HGH0 on the New York Mercantile Exchange's COMEX division lost 9.20 cents, or 2.67 percent, to end at $3.3550 per lb. It bottomed at $3.3385, the lowest since Jan. 13. On the London Metal Exchange, copper MCU3 for three-months delivery closed down $170 at $7,375 a tonne. "We have got two big issues: the news coming out of China ... also we are looking to the stronger dollar which is affecting the copper market," said Tom Hartman, broker with Altavest Worldwide Trading in Mission Viejo, California.

On Wednesday, Chinese authorities ordered some major banks to curb their lending for the rest of this month. Last week, the country raised bank reserve requirements for the first time since June 2008. Those moves may slow China's economic recovery and cut its demand for commodities, analysts say. Still, Carl Firman at Virtual Metals said sentiment remained bullish due to expectations for a recovery in the developed world and continued robust growth in China, in spite of the prospect of tighter credit conditions. Meanwhile, the copper market waits for growth and industrial output data coming out later this week from China, which could help fade worries about demand. Copper is used in the energy and construction sectors. "I fully expect to see a rise in refined copper imports on a monthly basis," Firman said. "The data will either buoy the prices or prices will hold steady in case figures are below estimates."

FURTHER PRESSURE

The euro tumbled to a five-month low against the dollar as concerns over Greece's debt triggered broad selling, putting further pressure on metals, which are priced a more expensive greenback. In London, aluminum and zinc fell to one-week lows, while lead tumbled to its lowest in nearly six weeks as the euro sank against the dollar. Aluminum inventories in LME warehouses, at above 4.62 million tonnes, are near record highs, a sign of ample supply. Stocks of copper at 526,650 tonnes are more than double the levels seen in the middle of July and the highest in 10
months.