KUALA LUMPUR: London copper fell for a third straight session on Wednesday as investors scrambled into safer dollar holdings, fearing credit downgrades in Europe as the United States warned of risks to its economy from the euro zone debt crisis.
At its final policy meeting of the year, the US Federal Reserve gave no hints of new stimulus measures to offset the effects of the worsening European debt crisis, but did leave the door open to further easing next year.
"In the whole scheme of things, the topsy turvy situation in Europe is putting a negative blanket over the whole world," said Thomas Lam, a Singapore-based economist at OSK-DMG, a joint venture between Malaysian securities firm OSK Holdings Bhd and Germany's Deutsche Bank AG.
"The lack of any hint of any major policy move out of the FOMC meeting last night probably weighed on sentiments."
Three-month copper on the London Metal Exchange declined 0.93 percent to $7,529 a tonne by 0252 GMT.
Prices fell as low as $7,492.50, the weakest since Nov. 30. London copper has tumbled about 22 percent this year, after gaining for the last two years.
The most-traded February copper contract on the Shanghai Futures Exchange dropped 0.6 percent to 55,770 yuan ($8,800) a tonne.
Copper prices were also hit by news that striking workers at Freeport-McMoRan Copper & Gold Inc were expected to return to the Grasberg mine in Indonesia on Saturday, ending a three-month dispute that has paralysed output at the world's second biggest copper mine.
The US firm and the union are expected to sign a pay deal within days, with Freeport agreeing to a rise of 37 percent over two years to end Indonesia's longest-running industrial dispute, the union has said.
In other markers, the euro wallowed at 11-month lows against the dollar, with bearish positioning dominating overnight moves after the US Federal Reserve policy meeting ended with no surprises.
Doubts lingered over Europe's ability to calm market fears over its debt crisis after German Chancellor Angela Merkel rejected any suggestion of raising the limit on Europe's bailout fund.
Markets were braced for a possible mass downgrade of euro zone countries, which would deepen the region's debt crisis, after last week's key summit offered no hopes for an immediate resolution.
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