Copper Snaps Five-Day Advance as Rally Prompts Investor Selling

SINGAPORE, Aug. 6 -- Copper snapped a five-day rally, pacing a drop in industrial metals, as an advance to the highest level in 10 months encouraged investors to sell holdings to lock in gains.

    Copper has almost doubled this year on optimism stimulus spending by governments around the world may revive commodities demand. The metal used in construction and automobiles climbed to $6,235 a metric ton yesterday, the highest since Oct. 2.

    "The metals are looking a bit overextended and the huge rally in the past few days has really surprised," Wang Zhouyi, analyst at China International Futures (Shanghai) Co., said today. "Many investors are expecting a large correction ahead so some are taking the opportunity to reduce holdings first."

    Copper for three-month delivery on the London Metal Exchange fell as much as 3.1 percent to $6,010 a ton and traded at $6,020 a ton at 10:51 a.m. in Singapore.

    September delivery copper on the Comex division of the New York Mercantile Exchange lost as much as 2.6 percent to $2.740 a pound, while November-delivery copper on the Shanghai Futures Exchange slid as much as 1.7 percent to 47,200 yuan ($6,910) a ton and was at 47,550 yuan by the 11:30 a.m. break.

    Industrial metals also fell as stock markets pared gains and the dollar halted its decline. The regional benchmark MSCI Asia Pacific Index of equities was little changed, curbing an increase of as much as 0.8 percent earlier.

    The Standard & Poor's 500 Index dropped from a nine-month high yesterday after reports on job losses and service industries were worse than economists estimated. The dollar was little changed against the euro after touching the weakest level since Dec. 18 yesterday.

    "It's all about investor sentiment driving these markets and the recent exuberance has been tempered by some weaker-than- expected data," said Wang.

    Among other LME-traded metals, aluminum slid 2.2 percent to $2,025 a ton, zinc dropped 2.2 percent to $1,883 a ton and lead declined 1.5 percent to $1,920 a ton. Nickel was 3.9 percent lower at $19,650 a ton, while tin declined 2 percent to $15,000 as of 10:53 a.m. in Singapore.

    (Source: Bloomberg)