Copper slides on weak US, China data

SHANGHAI: Copper prices fell on Monday on gloomy US payroll data and a historic low for an index of the Chinese services sector, as doubts grew over growth in the world's largest economies.

Traders said hopes of further monetary easing measures by the Federal Reserve and anticipation of restocking by copper users in the fourth quarter may limit losses.

Three-month copper on the London Metal Exchange edged down 0.3 percent to $9,045.25 a tonne by 0332 GMT, after falling 0.8 percent on Friday.

The most-active November copper contract on the Shanghai Futures Exchange fell 0.7 percent to 67,360 yuan per tonne, after falling 0.5 percent on Friday.

"US non-farm payroll figures, continued debt woes in the euro zone and the low HSBC China services PMI in August are all dampening sentiment today," Minmetals Futures analyst Zhuo Guiqiu said.

"I believe that when QE3 is finally unveiled, the markets will react widely and positively as the amount involved may be bigger than before."

Zhuo forecast LME copper to find support at between $8,800 and $8,900, and Shanghai copper to move between 66,000 and 68,000 yuan this week.

Metals markets have been hit by a rash of disappointing economic data in the past weeks, which have cast a shadow over efforts to revive demand.

US employment growth ground to a halt in August, reviving recession fears and piling pressure on both President Barack Obama and the Federal Reserve to provide more stimulus to aid the frail economy.

China, the main driver of global growth, saw the HSBC Purchasing Managers' Index for its services sector slow to a historic low in August, as tightening measures to rein in an exuberant property sector started to produce results, a long-running campaign that could curb demand for copper in construction.

The HSBC survey follows a pair of manufacturing PMIs that showed China's factory activity steadied in August, but tight monetary policy at home and torpid demand abroad add uncertainty to demand from China.

The weakness in metals markets mirrored equity markets, which also fell as fears of renewed recession in the United States and sustained worries about the euro zone's debt crisis have prompted investors to sell riskier assets.

Investors are watching a string of political and legal tests this week that could hurt Europe's efforts to resolve its sovereign debt crisis and increase pressure for governments to try more radical solutions.

Sentiment has also been dented by slowing economic growth in Brazil, which has been a rare bright spot in the struggling global economy.

Copyright Reuters, 2011