Copper down on Greek referendum, China data

SHANGHAI: London copper slipped on Tuesday after Greece said it was holding a referendum on the latest euro zone bailout plan, and an unexpected slowdown in Chinese factory activity also added to the global economic gloom.

Three-month copper on the London Metal Exchange fell 1.7 percent to $7,866 a tonne by 0708 GMT, after losing 2.3 percent in the previous session.

The most-active January copper contract on the Shanghai Futures Exchange dropped 0.9 percent to 57,710 yuan ($9,081.18) per tonne, after falling 1.7 percent on Monday.

The strengthening dollar is also making commodities priced in the greenback more expensive, and putting off investors. The US currency rose on Monday after Japan sold the yen for the second time in less than three months.

"It's not just copper prices that are receding today, but also equities and the euro," Phillip Futures analyst Ong Yiling said.

"Events such as the lingering crisis in Greece and the unexpected slowdown in China's PMI culminated in investors paring some of their bullish bets on commodities after their huge rally at the end of last week."

Greek Prime Minister George Papandreou risked triggering a new euro zone crisis with his shock announcement that he will put the bailout deal struck last week to try to contain the bloc's debt mountain to a referendum of voters already angry at harsh cuts.

Fears of a global economic slowdown were further stoked by official data showing China's big manufacturers ran at their slowest rate in October since early 2009, countering expectations of a rise.

Adding to worries about companies' exposure to the euro zone crisis, futures brokerage MF Global Holdings Ltd filed for bankruptcy protection after bad bets on euro zone debt.

"MF Global's collapse definitely has some impact on commodity markets by contributing to the risk aversion mood in the markets," Ong said. "But it is not going to be a Lehman Brothers-scale event."

In industry news, Chinese gold and copper miner Zijin Mining Group Co Ltd said on Monday that it has delayed the startup of its 200,000-tonne-per-year copper smelter.

Copyright Reuters, 2011