Copper Falls in Shanghai on Concern Recent Rally Is Overdone

BEIJING, Aug. 7 -- Copper fell in Shanghai on speculation the metal,s climb to a 10-month high this week may have outpaced the recovery in global demand.

    The metal used in electrical wiring and plumbing fell as much as 2.8 percent before a report today expected to show unemployment in the U.S., the world,s largest economy, reached the highest since 1983 last month. The dollar jumped the most in a week against six major currencies yesterday, trimming demand from investors buying commodities as an inflation hedge.

    "Investors will need further justification for their recent optimism with many pinning their hopes on tonight,s U.S. data," analysts at Investec Bank (Australia) Ltd. said today in an e-mailed report.

    December-delivery copper on the Shanghai Futures Exchange fell 1.8 percent to 47,100 yuan ($6,899) a metric ton at 10 a.m. local time, having earlier traded as low as 46,650 yuan. The contract, up more than 4 percent this week, reached a 10-month high of 48,940 yuan on Aug. 5 and is heading for its fourth weekly gain.

    The number of Americans collecting unemployment insurance climbed by 69,000 to 6.31 million in the week ended July 25, the Labor Department said yesterday. Tomorrow,s report will probably show the jobless rate rose to 9.6 percent, the highest in 26 years, economists surveyed by Bloomberg News predict.

    Three-month delivery copper on the London Metal Exchange fell 0.6 percent to $5,990 a ton. Copper for September delivery in New York fell 0.8 percent to $2.731 a pound.

    Among other LME-traded metals, nickel dropped 1.7 percent to $19,260 a ton, tin fell 1.4 percent to $14,500 a ton, aluminum slid 0.5 percent to $1,979.75 a ton and zinc dipped 0.3 percent to $1,845 a ton. Lead hadn,t traded early today.

    Aluminum for November delivery in Shanghai, the market,s most active contract, fell 1 percent to 15,195 yuan a ton, while zinc fell 1.5 percent to 15,100 yuan.

    (Source: Bloomberg)