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LONDON: Copper fell on Friday alongside stock markets and oil prices as poor economic data and new coronavirus restrictions in China, the world’s biggest raw materials consumer, weakened the outlook for economic growth and demand.

Benchmark copper on the London Metal Exchange (LME) was down 1.7% at $7,882 a tonne in official trading after reaching an eight-year high of $8,238 on Jan. 8.

“We are just hitting the buffers here,” said Saxo Bank analyst Ole Hansen. “Commodities had a phenomenal run, and that just screams correction.”

A coronavirus outbreak in China and the upcoming Chinese Lunar New Year holiday may curb industrial activity. This and slow progress suppressing the virus in Europe and the United States are forcing investors to reassess copper’s near-term outlook, he said.

But many analysts, including Hansen, say supply will tighten as the year progresses, pushing prices higher.

China reported 103 COVID-19 cases on Friday, with Beijing launching mass testing in some areas and Shanghai testing all hospital staff.

Economic activity in the euro zone shrank markedly in January, PMI surveys showed, while forecasters surveyed by the European Central Bank downgraded their growth expectations for the bloc this year.

Japan’s factory activity slipped into contraction in January.

Oil prices and Chinese, European and US equities fell. The US dollar steadied after three days of losses.

Speculators are reducing bets on higher copper prices from multi-year peaks.

However, copper stocks in warehouses monitored by the LME, Comex and the Shanghai Futures Exchange are dwindling, with ShFE inventories the lowest since 2011.

Benchmark tin was down 1.3% at $21,725 a tonne after tightness in the LME system pushed prices to $22,395, the highest since 2014, on Thursday.

Stocks in LME-registered warehouses have plunged to 1,030 tonnes, near record lows, with almost 40% already earmarked for delivery.

The premium for cash tin over the three-month contract surged to a record high of around $553 a tonne on Thursday before easing on Friday to around $350.

LME aluminium was down 1.1% at $1,976 a tonne, zinc fell 1.4% to $2,672.50, nickel slipped 2.5% to $17,938 and lead was 0.8% lower at $2,025.

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