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Copper Drops for First Time in a Week on Fed Taper Speculation

Oct. 31 (Bloomberg) -- Copper futures fell for the first time in a week amid speculation that the Federal Reserve may start to slow economic stimulus sooner than forecast in the U.S., the world’s second-biggest user of the metal.

The Fed signaled diminishing concern over higher borrowing costs after a two-day meeting yesterday, even as it maintained $85 billion in monthly bond purchases. The central bank’s statement opens the possibility of reduced debt-buying as soon as December, Citigroup Inc. and Barclays Plc said yesterday.

“The markets realize that tapering is going to happen at some point, with the only question being how quickly they’ll do it, and the Fed statement was a reminder of that,” Frank Lesh, a trader at FuturePath Trading in Chicago, said in a telephone interview. “The markets had perhaps gotten bid up a little more than they should have ahead of this meeting.”

Copper futures for delivery in December fell 0.8 percent to settle at $3.3005 a pound at 1:19 p.m. on the Comex in New York, halting a 1.9 percent gain in the previous four sessions. For the month, the metal slipped 0.7 percent.

The odds that stimulus will slow in January rose to 45 percent from 25 percent before the Fed announcement, according to Citigroup. Economists surveyed earlier this month by Bloomberg said the Fed would wait until March to begin curbing its bond purchases.

Copper stockpiles monitored by the London Metal Exchange rose for the first time since Sept. 4 to 476,150 metric tons. Metal amounting to 3,375 tons was delivered in New Orleans, the biggest global repository for the metal. Orders to remove copper from warehouses dropped 1.1 percent to 291,500 tons.

Glencore Xstrata Plc, the mining company created in a $29 billion deal five months ago, said third-quarter copper output jumped 34 percent as African mines added to volumes.

On the LME, copper for delivery in three months lost 0.6 percent to $7,249 a ton ($3.29 a pound). The price rose in the previous five sessions, the longest rally in three months. The metal slipped 0.7 percent this month.

Aluminum, tin, nickel, zinc and lead also fell in London.

To contact the reporters on this story: Joe Richter in Washington at jrichter1@bloomberg.net; Agnieszka Troszkiewicz in London at atroszkiewic@bloomberg.net

To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net

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