Copper Extends Fall From 10-Month High After U.S. Stocks Drop

SHANGHAI, Aug. 17 -- Copper fell for a second day, extending a decline from a 10-month high, after U.S. stocks dropped, renewing investors' concern that the metal's rally isn't justified by economic prospects.

    U.S. equities retreated after consumer confidence unexpectedly declined this month amid growing concern over jobs and wages, according to data released on Aug. 14. Copper, used in homes and power grids, has jumped about 15 percent in the past month, driven by speculation of an economic recovery.

    "The drop in U.S. stocks dealt a blow to metals," Zeng Chao, an analyst at Everbright Futures Co., said in an e-mailed report today. Gains in copper stockpiles had also increased downward pressure on prices, he said.

    Three-month delivery copper fell as much as 2.9 percent to $6,065 a metric ton on the London Metal Exchange, and traded at $6,070 a ton at 9:39 a.m. in Singapore. The contract had jumped to the highest since Oct. 1 last week.

    The Reuters/University of Michigan preliminary index of consumer sentiment decreased to 63.2 in August, the lowest since March, from 66 in July. Economists had forecast that the index would rise to 69, according to the median projection in a Bloomberg News survey.

    Copper for November delivery on the Shanghai Futures Exchange fell by the daily limit of 5 percent, from the previous settlement price, to 47,790 yuan ($6,993) a ton. Shanghai zinc also slumped by the daily limit to 14,465 yuan a ton.

    Copper inventories monitored by the London Metal Exchange have surged 14 percent since July 14, while the metal in warehouses tracked by the Shanghai Futures Exchange rose last week to the highest level since August 2007.

    Among other LME-traded metals, aluminum lost 2.5 percent to $1,940 a ton, lead retreated 1.5 percent to $1,825 a ton, zinc slid 1.4 percent to $1,800 a ton, nickel fell 2.5 percent to $19,080 a ton and tin was 1.4 percent down at $14,300 a ton.

    (Source: Bloomberg)