Copper, Aluminum Drop as Weaker Data Drive Speculation Recovery May Falter

Copper, nickel and aluminum declined in London for a second straight day on mounting concern that the global economic recovery may be faltering as manufacturing slows from China to the U.S.

Three-month copper on the London Metal Exchange fell as much as 0.9 percent to $9,016 a metric ton, the lowest level in a week, and was at $9,027 at 1:36 p.m. in Singapore. Zinc and lead also fell, joining equities and other commodities including oil, as the outlook for global growth dimmed.

Output in the U.S. was the weakest in a more than a year, according to a report yesterday, while industrial production cooled in India and the U.K. In China, one report yesterday showed manufacturing grew at the slowest pace in nine months, while another indicated the slowest growth in 10 months.

“Global economic growth appears to be moderating and this is weighing on market sentiment,” Zhu Yan, an analyst at Xiangyu Futures Co., said from Shanghai. China and the U.S. are the world’s two biggest users of copper.

July-delivery copper on the Comex in New York lost as much as 0.7 percent to $4.079 per pound, dropping for a third day. Copper for August delivery on the Shanghai Futures Exchange fell as much as 1.5 percent to 67,300 yuan ($10,381) a ton.

Some economists trimmed forecasts for May payrolls that will be reported in two days after a private report yesterday showed U.S. companies last month added jobs at the slowest pace since September. Goldman Sachs Group Inc. (GS) reduced its estimate to a gain of 100,000 from 150,000, while Deutsche Bank Securities Inc. cut its target to 160,000 from 225,000.

‘Much More Anxious’

“If you knock out employment gains, you really take back this idea that we’ve entered a sustainable recovery,” James Paulsen, chief investment strategist at Wells Capital Management, said in a Bloomberg Television interview. “If we’re no longer in a sustainable recovery, then investors get much more anxious.”

The weaker-than-expected data have triggered speculation that the U.S. Federal Reserve may decide to extend economic stimulus beyond the expiration in June of its current program of so-called quantitative easing.

Aluminum in London lost as much as 1.4 percent to $2,630 a ton and nickel dropped as much as 1.5 percent to $22,900 a ton. Zinc dropped 0.8 percent to $2,239 a ton, lead lost 1.3 percent to $2,469 a ton and tin declined 1.1 percent to $27,300 a ton.