Copper Futures Decline on Dollar's Rally, Drop in Germany's Factory Orders

Copper futures fell for the first time in four sessions as the dollar climbed, reducing demand for the industrial metal as an alternative investment.

The dollar headed for the biggest gain in almost four weeks against a basket of six major currencies, partly on renewed European debt concerns. Copper also slid as a report showed an unexpected drop in factory orders in Germany, the world’s third- biggest consumer.

“The stronger dollar is the main factor,” said Robin Bhar, an analyst at Credit Agricole SA’s investment-banking unit in London. The euro fell after an industry group said the 10 largest banks in Germany may need fresh capital to meet new regulations.

Copper futures for December delivery fell 2.95 cents, or 0.8 percent, to close at $3.4705 a pound at 1:13 p.m. on the Comex in New York. The price has gained 21 percent in the past 12 months.

Deutsche Bank AG and other German lenders must raise about 105 billion euros （$134 billion） to reach an estimated 10 percent Tier 1 capital ratio, a key measure of financial strength, Dirk Jaeger, who is responsible for regulatory topics at the Association of German Banks, said yesterday.

“In Europe, concerns have arisen that the sovereign-debt crisis could still spread and pose a significant threat to the global recovery,” Walter de Wet, an analyst at Standard Bank Plc, said in a report today.

German Factories

German factory orders, adjusted for seasonal swings and inflation, declined 2.2 percent in July from June, the Economy Ministry said today. The drop, the biggest since February 2009, indicated the recovery in Europe’s largest economy is losing momentum.

Copper for delivery in three months dropped $80, or 1 percent, to $7,629 a metric ton on the London Metal Exchange （$3.46 a pound）.

The price reached a four-month high of $7,750 on Sept. 3, helped by this year’s 21 percent drop in exchange-monitored inventories. Today, stockpiles dropped for the third straight session to 395,475 tons, the lowest level since Nov. 10.

Orders to draw copper from inventories, or canceled warrants, declined for a fourth session, sliding 5.4 percent to 24,700 tons.

Aluminum, lead and zinc also fell in London. Nickel and tin gained.