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METALS-Copper steadies near two-week lows as China worries drag
January 6, 2014 / 11:06 AM / 4 years ago

METALS-Copper steadies near two-week lows as China worries drag

* China’s service industries slow in December

* Dollar falls as U.S. services data suggests slowing growth

* Inestors await U.S. jobs data for clues on Fed tapering

By Maytaal Angel

LONDON, Jan 6 (Reuters) - Copper steadied on Monday as the dollar fell but the metal remained near a two-week low on concerns about economic recovery in China, which accounts for about 40 percent of global copper demand.

Three-month copper on the London Metal Exchange fell to its lowest since Dec. 24 at $7,278.75 a tonne on Monday, before closing at $7,325 from $7,315 on Friday.

Data showed growth in China’s service industries had slowed in December, mirroring a slowdown in manufacturing and confirming views that the world’s second-largest economy lost steam at the end of last year.

In addition, China’s cabinet has issued new rules to strengthen regulation of shadow-bank lending, which has helped fuel an explosion in debt levels since 2008, in the latest effort to address rising financial risks.

Copper fell 7.2 percent in 2013, though it gained more than 4 percent in December as a decline in readily available refined metal in exchange-authorised warehouses helped push up the premium for cash copper, which reached $16.50 a tonne over the benchmark price on Monday.

“It has to be seen if the reductions in LME stocks are real or (reflect) hidden stock movements,” T-Commodity analyst Gianclaudio Torlizzi said.

He added: “In the end, macro factors are weighing on metals. We think generally it could be a month in which new fears about the Chinese banking sector will reappear, pushing metal prices down.”

Underpinning copper, however, was a fall in the dollar versus the euro as weaker-than-expected data gauging the U.S. services sector reflected slowing growth at the end of last year.

A weak dollar makes dollar-priced metals cheaper for non-U.S. investors.

Wednesday’s December Federal Reserve meeting minutes and then Friday’s non-farm payrolls data will give further clues on how quickly the Fed could unwind the economic stimulus that has been a major driver for global risk assets such as metals in the past few years.

In other metals traded, tin closed at $21,725 a tonne - having earlier hit its lowest since early September at $21,301 a tonne. It closed at $21,500 on Friday.

Nickel closed at $13,560 a tonne from a last bid of $13,845 on Friday.

Aluminium closed at $1,782.50 a tonne from a last bid of $1,772 on Friday, zinc at $2,034 a tonne from a previous session close of $2,026 and lead at $2,165 a tonne from $2,176.

PRICES

Three month LME copper

Most active ShFE copper

Three month LME aluminium

Most active ShFE aluminium

Three month LME zinc

Most active ShFE zinc

Three month LME lead

Most active ShFE lead

Three month LME nickel

Three month LME tin

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