LONDON: Copper hit its lowest in nearly a month on Monday as investors, already worried over Europe's debt, digested news that US plans to combat debt are in disarray and took in warnings from China about gloomy global growth prospects.
A US congressional "super committee" is expected to formally announce later on Monday the failure of its three-month-long effort to forge a $1.2 trillion deficit reduction plan, sparking fears over growth prospects for the world's largest economy.
In a further knock to sentiment, Chinese Vice Premier Wang Qishan said overnight that a long-term global recession is certain to happen and China must focus on domestic problems.
China is the world's top copper consumer, taking in about 40 percent of the world's copper.
Even better-than-expected housing data from the United States, the world's largest economy, failed to boost metals prices as sovereign debt worries continued to be under the spotlight.
Three-month copper on the London Metal Exchange closed at $7,310 a tonne, almost 3 percent down from a $7,525 at the close on Friday. The metal, used in power and construction, earlier hit a near one-month low of $7,252.
"The numbers from the US have been improving lately but as much as the market wants to cling on to positive data, the macro uncertainty about the euro zone debt crisis and the US Congress not agreeing on debt cuts is making people concerned," Andrey Kryuchenkov, an analyst at VTB Capital, said.
"Fundamentally nothing has changed but people are worried about a debt default; the Chinese are worried too. They are getting increasingly frustrated with the situation in Europe dragging on for so long."
Spain's election of a new government seen as a better steward for the economy gave little cheer to investors, who poured their money into the perceived safety of German government debt.
"Lack of constructive news out of the EU and US, plus further signs of a slowdown in Asia are likely to weigh on prices and, with prices of some of the metals resting on important support levels, there may well be room for new initiatives on the downside," BaseMetals.com analyst William Adams said in a note.
Copper trading volumes on the LME were low.
"There's not much real business in the rings, technical and black box funds are shorting the market and taking their leads from the euro zone crisis," an LME trader said.
COMFORT AMIDST GLOOM
With so little to cheer on the macro side, investors took some comfort from data showing copper stocks, seen to signal demand strength, continued their slide in LME warehouses.
Stocks fell by 2,275 tonnes to total 395,975 tonnes, their lowest since early February, while cancelled warrants - material set to leave warehouses - jumped up to 13,250 tonnes, with most of the material likely heading to Asia.
Also offering support is the strike at Freeport-McMoRan Copper & Gold Inc's Grasberg mine in Indonesia, where production has been halted for nearly two months.
Stainless-steel ingredient nickel was the only base metal to gain some points on the day.
It ended at $17,775 versus $17,655 at the close on Friday, with LME stocks down 810 tonnes to 83,940 tonnes, close to their lowest in nearly three years.
Indicating nearby supply is getting increasingly hard to come by, cash nickel traded at a premium of $25 a tonne to the three-month benchmark, versus a discount of $6 a tonne in mid-November.
"Nickel has support from what should be a switch from nickel pig iron to other forms of nickel in China. The tipping point at which pig iron becomes unprofitable for Chinese stainless producers we believe is around $18,000 a tonne," said Natixis analyst Nic Brown.
Soldering metal tin finished $20,450 a tonne in rings versus 21,275, having earlier hit $20,400, its lowest in more than a month.
Zinc, used in galvanizing, was $1,915 versus $1,965, aluminium was $2,067 from $2,110. Lead was at $1,995 versus $2,059.
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