Copper Extends Decline to 11-Week Low on Europe, China Concerns

May 6 (Bloomberg) -- Copper dropped, extending a decline to the lowest level in more than 11 weeks as concerns deepened that Europe’s debt crisis and China’s credit tightening would hurt the global economic recovery.

Three-month delivery copper on the London Metal Exchange fell as much as 1.9 percent to $6,825 a metric ton at 3:23 p.m. in Singapore, erasing earlier gains of as much as 1.8 percent. The metal tumbled to $6,958.50 a ton yesterday, the lowest close since Feb. 15. Aluminum, nickel, zinc and tin also declined.

The Reuters/Jefferies CRB Index of 19 raw materials completed its biggest two-day slide in three months yesterday as the dollar climbed and European debt concerns rattled investor confidence. Moody’s placed its Aa2 rating for Portugal on review for a possible downgrade, a process that will conclude within three months, the company said in a statement.

“Fundamentally, copper inventories showed a steady decline, yet sentiment is bearish due to euro-zone debt issues and China’s credit tightening,” Li Qiang, an analyst at Xinhu Futures Co. said from Shanghai.

Copper for August delivery fell 1.5 percent to 56,030 yuan ($8,207) a ton in Shanghai, the lowest close since Feb. 12.

London copper has fallen 14 percent the past month as China, the world’s biggest metals user, tightened lending controls and policy makers in Europe haggled over a 110 billion euro ($142 billion) rescue package for Greece.

European Central Bank council member Axel Weber yesterday said Greece’s fiscal crisis is threatening “grave contagion effects” in the region. The euro plunged to a 15-month low as riots over austerity proposals cost three lives in Athens.

China’s home prices may slump 30 percent as local authorities implement government measures to crack down on property speculation, analysts at brokerages including China Jianyin Investment Securities Co. said.

Still, reports yesterday showed service industries in the U.S., the world’s second-largest copper user, expanded for a fourth month while stockpiles of the metal monitored by the LME declined for a seventh session.

Aluminum fell 2 percent to $2,079 a ton, nickel tumbled 3.8 percent to $21,100 a ton, zinc decreased 1.1 percent to $2,101 a ton and tin slid 1 percent to $17,400 a ton. Lead was down 0.6 percent to $1,929 a ton.