Copper falls to three-week low

Copper fell to a three-week low on Thursday, breaking below a key support level, as delays in securing a crucial bailout package for highly indebted Greece undermined sentiment, halted the rally for risk assets and pushed the euro lower against the dollar.
Three-month copper on the London Metal Exchange ended at $8,300 a tonne from a close of $8,370 on Wednesday. It earlier hit its lowest level since January 23 at $8,204.75 a tonne, breaking below $8,280, which is seen as a key support level. Copper has risen around 9 percent so far this year.
Recent market confidence that negotiations between Greece and the European Union would be successful were undermined Thursday by growing public acrimony between Athens and its euro zone partners, led by Germany. "What this means for metals is more to do with how it affects China and America. America has a fragile economic recovery and it (the Greek debt crisis) is hurting Chinese exports to the eurozone. I think copper could dip to $8,000 or $7,900, depending how long people are willing to take profits," said VTB Capital analyst Andrey Kryuchenkov.
Adding to negative sentiment, Moody's warned it might cut the credit ratings of 17 global and 114 European financial institutions in another sign the impact of the euro zone government debt crisis is spreading throughout the global financial system. "From a fundamental perspective, the copper market is very tight, but if the (eurozone) crisis deepens, it will impact global growth and developing countries' consumption of raw materials," said Caroline Bain, an economist with the Economist Intelligence Unit (EIU).
On the plus-side, however, US data showed jobless claims unexpectedly fell last week to a near four-year low, another sign of improvement in the labour market of the world's largest economy, while January housing starts were also better than forecast.
Concerns also lingered in the metals market about the demand outlook for top copper consumer China, which has yet to pick up after the week-long Lunar New Year holiday late in January, in part due to lower order visibility on products for export to debt-laden Western economies.
"There are concerns about Chinese demand, the closed arbitrage window and lower January imports, but that overstates the situation because the Lunar New Year fell earlier this year," said Matt Fusarelli of Australia-based consultancy AME Group. "We're still quite bullish on copper prices, expecting around $4 a pound ($8,818 a tonne) in the second quarter." Output from the world's largest copper mine, Chile's Escondida, plummeted 24.6 percent in 2011 from a year earlier to its lowest level in nearly a decade on sinking ore grades and a two-week strike, the mine said late on Wednesday.
Aluminium ended at $2,160 a tonne from Wednesday's close of $2,200, while battery material lead closed at 2,015 from a close of $2,062. Zinc, used in galvanising, fell to $1,987 from $2,012 a tonne, tin at $24,005 from $24,595 and nickel at $19,900 from $20,075. The global nickel market was in a supply surplus by 17,000 tonnes last year, the latest monthly bulletin from the Lisbon-based International Nickel Study Group (INSG) showed.