SINGAPORE: London copper dropped below $7,000 for a second day on Friday and was on track for its biggest weekly decline since 2011, after global growth worries and a historic sell-off in gold turned investors away from commodities.
Shanghai copper pierced below the 50,000 mark for the first time since June 2010, heading for its worst weekly showing in 19 months. But selling was confined to the copper contracts, with other metals contracts on both exchanges holding above recent lows, suggesting the broad scale of liquidation may be easing.
Three-month copper on the London Metal Exchange fell by 2.23 percent to $6,930.25 a tonne by 0309 GMT, slipping toward a 1-1/2 year low of $6,800 hit the session before.
Prices have lost almost 7 percent so far this week and are now down by more than 12 percent on the year.
The most-traded August copper contract on the Shanghai Futures Exchange shed 0.85 percent to 50,100 a tonne, after closing limit down on Thursday. The prices were headed for an almost 10 percent drop this week.
"My feeling is that overseas investors are more pessimistic than Chinese companies. Despite the current depression of copper, there hasn't been a big change in fundamentals - the sell-off is macro related," said Chunlan Li, a Beijing-based analyst at metals consultancy CRU.
Li expects seasonal Chinese demand strength to underpin prices in the near term, although she did not rule out a further drop in prices as the year unfolds.
"In the second half we will see new mine supply coming on, so supply pressure is quite big -- that might add pressure to prices towards the end of the year," she said.
Reflecting souring sentiment towards commodities, investors in US-based funds pulled a record $2.7 billion out of commodities and precious metals funds in the latest week, data from Thomson Reuters Lipper service showed on Thursday.
In further signs of a moderation in economic growth, the number of Americans filing new claims for unemployment benefits rose last week and factory activity in the nation's Mid-Atlantic region cooled in April.
"Trading desks report opportunistic buying of physical consumers at current levels," said Credit Suisse in a research note. "Given challenging technical momentum and wobbly economic data, we think it is questionable whether this near-term recovery can continue much further," it added.
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