Copper drops three percent

Copper slipped nearly three percent on Tuesday on concerns over the eurozone debt crisis as well as action by China's sovereign wealth fund to stabilise its major lenders which jilted confidence in the world's top consumer of metals. Benchmark copper on the London Metal Exchange (LME) closed at $7,290 a tonne, down from Monday's close of $7,495 a tonne and having earlier fallen more than four percent.
The metal hit its lowest in 14 months on Oct. 3 at $6,635 a tonne on concerns slowing growth in China could help tip the eurozone and US into a double dip recession. "You look at the macro picture and it's the same old story. Everyone is still nervous about Europe and politicians getting their act together," analyst David Wilson of Societe Generale said.
"We seem to be having a Ground Hog Day - but it's Ground Hog six months," he added. Greece should receive a vital lifeline next month in order to avoid bankruptcy, its international lenders said on Tuesday, buying time in a debt crisis that Europe's top central banker labelled "systemic."
Europe's banks will have to achieve a significantly stronger capital position under a quick-fire regulatory health check and may need to raise some 100 billion euros ($137 billion), banking and regulatory sources said on Tuesday. A move by China's sovereign wealth fund to raise its stake in its "big four" lenders undermined confidence in the economic strength of the world's top copper consumer.
"There was a story overnight about the Chinese government coming in and buying shares in the banks in China... I don't think they're buying those because they're undervalued, but to stabilise the situation," said analyst Jaspar Crawley of Triland. China accounted for around 40 percent of refined copper demand last year.
Also putting pressure on prices was a rise in the dollar, which reversed weakness from the previous session to gain against a basket of currencies. A strong dollar makes commodities more expensive for holders of other currencies. Aluminium closed at $2,230 a tonne. It was untraded at the close on Monday, but was bid at $2,258 a tonne. Aluminium producer Alcoa kicks off the third-quarter US earnings season after markets close on Tuesday.
Worries about the eurozone debt crisis, and concerns about demand from top consumer China have put pressure on the outlook for the company. Its results are expected to reflect a weakened economy, with demand for aluminium strong in some sectors such as aerospace but weak in others like construction. Lead closed at $1,985 a tonne, down from Monday's close of $2,005 a tonne, while zinc finished at $1,912 a tonne from $1,950 a tonne on Monday.
Tin ended at $22,425 a tonne from a close of $23,050 on Monday and nickel traded at $18,875 a tonne from $19,375 on Monday. Also pressuring tin prices, Indonesia's state-owned PT Timah, the world's largest integrated tin miner, has started to again export tin ingot - breaking a stoppage agreed by smelters last month, an official said on Tuesday.