Copper drops after gloomy US data rattles markets

Published: 13 May 2009 23:31:22 PST

LONDON, May 14 - Copper fell 1.5 percent on Thursday, extending the previous day's decline on unexpectedly gloomy U.S. retail sales data which shook confidence across markets.

Equities worldwide dropped after April retail sales figures on Wednesday showed a second straight month of declines after back-to-back gains in January and February, confounding investors' hopes that some economic recovery had taken root.

PRICES * Three-month copper on the London Metal Exchange was trading at $4,375 a tonne at 0706 GMT compared with $4,440 at the close on Wednesday.

* Aluminium was at $1,516.75 a tonne from $1,525.

DATA/EVENTS

* U.S. producer prices data due at 1230 GMT.

BRUSSELS - The Brussels Economic Forum 2009 (to May 15).

PARIS - International Energy Agency (IEA) to publish its monthly oil market report.

PARIS - French President Nicolas Sarkozy meets Jean-Claude Trichet President of the European Central Bank (1030 GMT).

MARKET NEWS

* The yen and dollar held near some of their strongest levels this week after bleak U.S. retail sales data rekindled worries about the economy, prompting investors to reduce bets on riskier assets.

* Oil prices towards $57 a barrel, after a 1-percent plus decline the previous day, as equity markets slipped, weighing on optimism for economic recovery and energy demand.

* Asian stocks fell as weak U.S. retail sales highlighted a long road to economic recovery, prompting profit-taking on winning bets in equities, higher-yielding currencies and commodities over the past two months.

* European shares fell for a fourth straight day, tracking losses in overseas markets, with a gloomy U.S. retail sales report the previous session prompting investors to trade cautiously.

* U.S. stocks tumbled on Wednesday as a gloomy retail sales report revived recent anxiety about the economy's struggle and caused a broad sell-off that accelerated late in the session.

FUNDAMENTALS

* ArcelorMittal, the world's largest steel producer, said it will idle production on the west side of the company's Indiana Harbor facility in East Chicago, Indiana, until market conditions improve. It has notified the USW of the indefinite layoff of 978 employees at Indiana Harbor in accordance with government regulations.

* ArcelorMittal has announced a $2.25 billion bond issue.

* Aurubis, Europe's biggest copper smelter, said it expected its production facilities to remain fully utilised as it reported a second-quarter pretax profit that beat expectations.

* First Quantum Minerals said its first-quarter profit plunged a 94 percent, missing analysts' estimates, as higher copper and gold production was more than offset by a sharp drop in copper prices and a hedging loss.

* Major UK-based investors in Rio Tinto have demanded afresh that the mining giant scrap a deal with Chinalco and actively pursue a new capital raising or a sale of assets to rival BHP Billiton.

TECHNICALS * Copper support at $4,300 a tonne, resistance at $4,925, 14-day RSI at 40.5.

* Aluminium support at $1,450 a tonne, resistance at $1,650, 14-day RSI at 51.

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