Mining Stocks Slide as S&P Cuts Anglo to Junk; Copper Retreats

Fitch Follows Moody's, Downgrades Anglo American
  • Bloomberg Intelligence gauge falls first time in five days
  • Copper, other industrial metals fall, while zinc gains

A rally in mining stocks fizzled Thursday as Anglo American Plc was cut to junk by a third credit-rating firm this week and analysts speculated that valuations are stretched. Most metals declined.

BI Global Large Base Metals Competitive Peers Index headed for the first loss in five sessions, with declines in Anglo American, Brazil’s Vale SA and Alcoa Inc. Anglo American retreated as much as 8.5 percent in London. The BI index of 18 producers climbed 22 percent in the previous four sessions amid speculation that output cuts would help shore up prospects for metals prices.

“These companies just got too far ahead of themselves relative to what their earnings were,” Donald Selkin, chief market strategist at National Securities Corp. in New York, who helps manage about $3 billion, said in a telephone interview. “Copper looks like it’s dead in the water.

Copper futures for May delivery for delivery fell 0.1 percent to settle at $2.0765 a pound on the Comex in New York. Copper, lead, nickel, aluminum and tin dropped on the London Metal Exchange, while zinc advanced.

Metals are falling after a report showed China’s producer-price index dropped 5.3 percent last month, extending declines to a record 47 months. Producer prices have been falling due in part to overcapacity in the manufacturing sector and lower commodity prices, according to Commerzbank AG.

The Chinese PPI data hurt sentiment in the market, Malcolm Freeman, a director of West Malling, England-based brokerage Kingdom Futures Ltd., said in an e-mailed note.

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