METALS-Copper tumbles to lowest since June 18 after U.S. data

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By Rebekah Curtis | July 1, 2010 5:20 AM EST

Copper tumbled to its lowest in more than a week on Wednesday after weak U.S. employment data
raised the prospect of further losses as markets fretted aboutglobal economic growth and demand.

Other base metals slipped to their lowest in nearly three weeks with aluminium at one point down to $1,920 a tonne, zinc at $1,722, lead at $1,677 and nickel at $18,933. Tin fell to $17,200, its lowest since June 15.

Copper for three-month delivery on the London Metal Exchange was trading at $6,425 a tonne at 1411 GMT from a close of $6,494 on Tuesday.

Earlier copper fell to $6,340 a tonne, its lowest since June 18. The metal used as a gauge of economic activity is on course for its first quarterly loss since the last three months of 2008 when it fell below $3,000 a tonne.

The trigger for losses in afternoon trade was news that private employers in the world's largest economy, the United States, added only 13,000 jobs in June, from a revised gain of 57,000 in May, a report showed.

"The U.S. jobs data were disappointing, as they point to a continuation of the anaemic recovery in the United States," said David Thurtell, analyst at Citi.

"With world producers looking for consumers to step up to the plate, we need jobs to be created. The BRIC economies, particularly China, are doing their best to act as a locomotive, but the load is a heavy one."

Sentiment was further undermined by a survey of business activity in the U.S. Midwest and news that business activity in New York dipped in June.

LME copper is headed for a quarterly loss of more than 15 percent.

"People are pretty downbeat at the moment ... so we continue to see people taking risk off the table, sitting on high levels of cash," said Dan Smith, analyst at Standard Chartered.

STOCKS

Traders also said the weaker dollar, which makes metals priced in the U.S. currency cheaper for holders of other currencies, would help support prices.

Aluminium was trading at $1,940 a tonne from $1,950 a tonne on Tuesday.

Offering the demand picture some support, stocks of aluminium at LME warehouses have been on the decline, last falling 5,475 tonnes to around 4.4 million tonnes, down from a record above 4.6 million tonnes hit earlier this year.

Zinc was at $1,745 a tonne from $1,743 and battery material lead was at $1,699 a tonne from $1,720.

Tin was at $17,340 a tonne from $17,600 and nickel was at $19,061 a tonne from $19,075.

"This is a market that from a macro perspective is not looking very robust," said Deutsche Bank analyst Dan Brebner.

"The conditions in Europe look highly risky," he said.

"There are questions with respect to the U.S. possibly slipping into another recession. Risk aversion is likely to be elevated."

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