Industrial metals fell on Wednesday as credit market worries offset strike concerns in the copper market, and tin shed nearly 5 percent to its lowest since April as investors sold holdings, analysts said.
Benchmark metal copper traded down to $7,245 per tonne, its lowest since late June, before ending London Metal Exchange business at $7,310 per tonne, down $100 from Tuesday's close.
Shares in diversified miners BHP Billiton, Anglo American and Xstrata were down more than 1 percent by 1528 GMT, while the FTSE index of leading shares was down 0.4 percent as a rising number of financial institutions revealed credit-related problems.
"The financial markets shake-out is not yet over. While uncertainty continues, copper should follow global market sentiment and be influenced by global market sentiment - not by fundamentals," Standard Bank said in a weekly report.
Markets were steady after a key gauge of inflation in the United States, the Consumer Price Index, rose broadly in line with expectations in July, according to data issued at 1230 GMT.
Still, sentiment is still very pessimistic, said analyst Edward Meir at metals brokerage MF Global. "If financial markets continue to wither, we do see the Fed coming in and cutting (interest) rates in order to change the terribly negative market psychology," he said. Even some of the biggest gainers in the metals markets, tin and lead, were knocked.
Tin, which has gained some 19 percent so far this year on supply problems in major supplier Indonesia, fell 4.9 percent to 13,500, its lowest since late April, before closing at $13,825/13,850.
Lead fell 4.3 percent to $2,880 from $3,010/3,011, before closing at $2,960. "Lead is probably the metal that has attracted most new longs (positions taken in anticipation prices will rise) during the past few weeks, so when people start taking profits, it is likely to be the metal that is hurt the most," analyst Michael Widmer at Calyon investment bank said. LME lead stocks dwindled to 29,350 tonnes - levels last seen in March 1990 and representing just over a day of global consumption.
In the longer term, traders said markets would remain firm, supported by strong Chinese demand and production constraints. Buying of copper was seen emerging at around $7,250/T due to industrial action by workers in Peru and the strike in Mexico. Workers at Southern Copper's Ilo smelter in Peru have rejected the company's wage hike proposal, a union leader said.
Grupo Mexico, the parent of Southern Copper, also was facing labour problems in Mexico. A strike at the Cananea mine has crippled production since July 30. A court hearing is set for August 15 to decide on the legality of the strike.
Traders said Chinese import figures for July were also supportive. China imported 116,913 tonnes of refined copper and copper alloy in July, down 4.2 percent from June. Imports in the first seven months of the year reached 1,114,675 tonnes, up 110.6 percent from a year earlier, customs figures showed.
Aluminium closed down $7 at $2,545 after falling to $2,521, its lowest since last October. The light metal has traded within a $2,500-2,900 range since that time. Zinc was down $55 at $3,230 and nickel dropped $400 to $26,500. By contrast, nickel traded at over $50,000 in May this year.
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