Bloomberg News

Copper Falls as S&P May Cut European Nations’ Credit Ratings

December 06, 2011

Dec. 6 (Bloomberg) -- Copper fell in London on revived concern that Europe’s sovereign-debt crisis may worsen after Standard & Poor’s said it might lower credit ratings for euro- area nations including Germany and France.

The region’s six AAA-rated countries are among those whose ratings may be cut depending on the result of a summit of European Union leaders on Dec. 9, S&P said yesterday. The euro dropped against the dollar today and the MSCI World Index of equities declined.

S&P’s announcement “dampened the optimism again late in the session,” Tobias Merath, head of global commodity research at Credit Suisse AG, said in a report. “The $8,000 mark for copper will be difficult to break.”

Copper for three-month delivery declined 1.8 percent to $7,800 a metric ton by 9:37 a.m. on the London Metal Exchange. Prices retreated for a first day in three. Copper for March delivery fell 2 percent to $3.544 a pound on the Comex in New York.

The metal is “trading with the news headlines and correlated with euro and equities again,” Andrew Silver, a trader at Natixis Commodity Markets Ltd. in London, said by e- mail. Developments in the debt crisis will keep influencing the market this week, he said.

Inventories Expand

Copper stockpiles monitored by the LME rose for a fourth day, climbing 600 tons to 390,100 tons, daily exchange figures showed. Inventories in Asia resumed their decline, shrinking for a 47th session in 48. Orders to draw copper from LME warehouses, or canceled warrants, gained 8.4 percent to 25,800 tons on an increase in South Korea.

Aluminum for delivery in three months on the LME fell 0.9 percent to $2,110 a ton. Buyers in Japan, Asia’s largest importer of the lightweight metal, secured a 5 percent cut in premiums charged by producers, the largest reduction in two years, said three executives involved in the negotiations.

Tin rose 0.6 percent to $20,125 a ton, the only gain among the six main metals traded on the LME. The fee investors pay to borrow tin for a day climbed as high as $2 a ton. The metal may return to highs reached this year and in 2008 because of curbs on supply, Peter Kettle, research manager at industry group ITRI Ltd., said yesterday.

Zinc declined 1.3 percent to $2,014 a ton and lead dropped 1.3 percent to $2,092 a ton. Nickel fell 2.7 percent to $18,000 a ton.

--Editors: Dan Weeks, Nicholas Larkin.

To contact the reporter on this story: Agnieszka Troszkiewicz in London at atroszkiewic@bloomberg.net

To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net


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