Copper Declines as U.S. Trade Data Fuels Fed Stimulus Concern

Copper fell as better-than-expected U.S. trade data fueled concern the Federal Reserve may reduce its bond purchases this year, reducing stimulus from the economy and weakening demand for base metals.

Copper for delivery in three months dropped 0.6 percent to $6,966.50 a metric ton on the London Metal Exchange at 11:44 a.m. in Tokyo. Futures for delivery in September dropped 0.5 percent to $3.1580 a pound on the Comex in New York.

The U.S. trade deficit narrowed more than economists expected in June to the least since October 2009, data showed yesterday. A number of Federal Reserve officials have signaled this week that cuts to asset purchases that have fueled global stock and bond gains are possible as the U.S. economic outlook improves.

“It’s not easy for investors to buy copper amid mounting concern over the Fed’s stimulus,” said Tetsu Emori, the chief fund manager at Astmax Asset Management Inc. in Tokyo. “Still, the physical market in Asia looks to be a bit tight.”

Federal Reserve Bank of Dallas President Richard Fisher, a critic of quantitative easing, said on Aug. 5 that the central bank is closer to slowing the pace of monetary stimulus. Half of the 54 economists in a Bloomberg survey last month expected the Fed to trim bond purchases at its meeting in September.

Futures for delivery in November on the Shanghai Futures Exchange were down 0.3 percent at 50,050 yuan ($8,176) a ton.

On the LME, aluminum, zinc, lead and tin were little changed, while nickel rose.

The LME Index of the six base metals has lost 13 percent this year.

To contact the reporter on this story: Jae Hur in Tokyo at jhur1@bloomberg.net

To contact the editor responsible for this story: Brett Miller at bmiller30@bloomberg.net

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