Copper Drops for Second Day on Prospects Fed May Taper Stimulus
Copper and nickel declined for a second day on concern that the Federal Reserve may begin to reduce its bond purchases this year, eroding demand prospects for raw materials.
Copper for delivery in three months on the London Metal Exchange fell 0.3 percent to $7,285.50 a metric ton by 1:55 p.m. in Tokyo, reversing an earlier gain of as much as 0.4 percent. The price slumped 1.3 percent yesterday after touching a 10-week high on Aug. 16. Nickel sank 0.8 percent to $14,686 a ton.
The Federal Reserve, which will publish minutes of its July meeting tomorrow, will probably start reducing bond purchases in September, according to 65 percent of economists surveyed by Bloomberg. The bond purchases were intended to boost economic growth in the U.S., the world’s second-biggest copper consumer.
“Sentiment for copper remained subdued on concern over the Fed’s stimulus view,” said Kazuhiko Saito, an analyst at commodities broker Fujitomi Co. in Tokyo. “Investors remain on the sidelines before manufacturing data in China this week.”
HSBC Holdings Plc and Markit Economics will release on Aug. 22 a preliminary reading for China on a manufacturing purchasing managers’ index for August, which is expected to come in at 48.1 from 47.7 in July, according to a Bloomberg survey. A reading below 50 indicates contraction.
Futures for delivery in December on the Shanghai Futures Exchange declined 0.7 percent at 52,380 yuan ($8,557) a ton. Metal for delivery in December fell 0.4 percent at $3.323 a pound on the Comex in New York.
On the LME, aluminum, lead, zinc and tin also dropped.
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