Copper held steady on Friday, as selling pressure from higher inventories and falling equity markets was balanced by a weaker dollar supporting prices, while aluminium touched a new seven-week high. European stocks sagged, tracking a fall in US shares with Britain's FTSE 100 index down around 1 percent, dragging down miners like BHP Billiton and Anglo American between 0.5-1.3 percent.
Copper for delivery in three months on the London Metal Exchange was flat at $7,860 a tonne by the end of the day. The metal, used extensively in construction, earlier hit $7,811 a tonne, its lowest in a month. "Dow Jones index opened down and I think that played a part taking the wind out of copper and aluminium," analyst Leon Westgate at Standard Bank said.
US stocks extended losses, with the Dow dropping more than 200 points on worry about the economy after manufacturer Caterpillar Inc cut its profit outlook. "Dollar weakness helps all the metals...But ahead of the weekend we see a bit of profit-taking coming in," Westgate said.
The dollar hit a fresh record low against the euro and a basket of currencies, pressured by the growing view that a slowdown in the US economy will force another cut in interest rates this month. "Copper is struggling a little bit," said Stephen Briggs at Societe Generale Corporate and Investment Banking told Reuters.
"It is relatively quiet with no huge movements despite continued stock increases."
Stocks of copper jumped, to 148,950 tonnes after another 1,200 tonnes came into LME warehouses and stocks monitored by the Shanghai Futures Exchange rose by 9.1 percent to 63,895. Traders said copper saw support at around $7,620-50 a tonne. "Although the stocks are building ... it is still not a huge amount and copper notoriously has supply disruptions and there could easily be another upset in supply and the whole thing takes off again," an LME trader said. LME stocks are up almost 13 percent this month, but they account for just three days of global consumption.
A strike at Mexico's giant Cananea pit - already 11 weeks old - could drag on for months as the mine's owners and the union prepare for a new round of legal wrangling over one of the world's largest copper reserves. Grupo Mexico, the owner of Cananea, said on Thursday it had no plans to restart talks with the union and was still fighting to have the strike made illegal.
Three-months aluminium hit a fresh seven-week high of $2,573 per tonne, it's highest since August 31 and ended the day at $2,558, up $5 from Thursday. "The market got very short and that's what you see now short covering," Westgate said, referring to speculators who previously sold off the metal, predicting lower prices, buying back their positions. In addition, inventories, having risen over 110,000 tonnes in September, have started to fall back helped support prices. On Friday stocks fell 1,775 tonnes to 932,650.
"Aluminium players are relieved that stock rises appear to have slowed," Man Financial analyst Edward Meir said. Lead stocks rose for a fourth straight day on Friday, by 2,000 tonnes to 33,450 - the highest since early August but the prices have ignored the rise. Three-months lead, the metal mainly used in batteries, gained 3.7 percent to $3,800 - up by 127 percent so far this year - before closing at $3,705, up $40 from Thursday.
"Even though it is quite a sudden increase, and it is widely believed there is more to come, it doesn't change the structural situation," SGCIB's Briggs said, referring to a tight market due to a Chinese export tax and limited Australian supply. Three-months nickel shed $300 to $32,200/32,250, while zinc was down $15 at $2,955 and tin was up $200 at $16,300.
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