London copper prices eased on Wednesday, under pressure from the dollar's strength and uncertainty over demand for industrial metals, although falls were limited by data showing the services sector in China grew marginally faster in November. A buoyant dollar contributed to a fall in the euro to its weakest level in more than two years, which put pressure on metals prices. A strong dollar makes commodities priced in dollars more expensive for holders of other currencies.
"Among the base metals the strength of the dollar has more of an effect on copper, because copper has typically been used by investors as more of an investment asset compared to many of the other metals," said Nic Brown, head of commodities research at Natixis. Three-month copper on the London Metal Exchange (LME) closed down 0.6 percent at $6,380 a tonne. The price fell to a 4-1/2 year low of $6,230.75 a tonne on Monday, tracking a slide in oil prices. It is down more than 13 percent in the year to date.
Helping to prevent further falls, China's services sector grew marginally faster in November, surveys showed, a welcome respite after a run of underwhelming data from the world's top copper consumer as it faces its worst slowdown in at least six years. But analysts said credit difficulties in China were keeping bargain-hunting in check.
"It just seems like there is so much less activity because of the credit constraints in China," Morgan Stanley analyst Joel Crane in Melbourne said. Premiums for copper in bonded warehouses in China were stagnant at $60 a tonne, suggesting consumers have not rushed to purchase metals after prices fell. In other metals, aluminium failed to trade in closing open outcry activity and was last bid down 0.3 percent to $1,972 a tonne.
The metal fell to a 5-1/2-week low of $1,956 a tonne in intraday trade, driven by stop-loss sales after prices pierced key support. Traders also said the December options expiry was influencing prices. Nickel bucked the weaker trend, ending up 1.5 percent at $16,595 a tonne as investors sought to position themselves for expected shortages after Indonesia banned ore shipments earlier in the year. Zinc dipped 0.1 percent to finish at $2,215 a tonne, lead closed unchanged at $2,028 and tin rose 0.3 percent to $20,450.
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