Thursday, November 18, 2010

Base metals fall further on debt concerns

(Reuters) -

Copper retreated on Wednesday to its lowest level in nearly two months as euro zone debt concerns sent investors fleeing from risk and as speculation mounted that top consumer China might raise interest rates.

Three-month copper on the London Metal Exchange CMCU3 fell to $8,085 at 1113 GMT, having dropped more than 5 percent to close at $8,150 a tonne on Tuesday. It earlier hit a session low of $7,920, its lowest since late September.

The metal used in power and construction hit a record high of $8,966 last week, but a combination of worries about monetary policy tightening, a firmer dollar and a flight from risk have since sent prices down.

"Concerns over euro zone sovereign debt are really what is at the forefront of the market's mind at the moment. What you're seeing is broad-based risk reduction," Gayle Berry, an analyst at Barclays Capital, said.

"Fundamentals are still strong, inventories are still falling ... it's a short term knee-jerk reaction to something that's not really impacted metal market fundamentals." (more)

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