Copper came under pressure on Monday, as risk-averse investors fretted over the credit crisis and its potential impact on the broader economy, analysts said.
Mining shares in London were mixed with some of them lifted again by talk of big buyouts while the broader FTSEurofirst 300 index ended down half a percent.
Diversified miner Rio Tinto, the subject of a $120-plus billion bid from BHP Billiton which it has shunned, erased earlier gains and fell 1.5 percent, while BHP was lost 1.8 percent as Britain's FTSE 100 share index reversed earlier gains and closed at 1.3 percent down.
Copper for three-months delivery closed at $6,715 per tonne, up $15 from Friday, after falling to $6,655 during the day. "There is a lot of negative news coming out of the financial system," economist John Kemp at Sempra Metals said. "The risk aversion is rising again."
Goldman Sachs has downgraded its rating on HSBC to "sell", saying Europe's biggest bank would likely need a further $12 billion in provisions for its US subprime mortgage and home equity loans. Metal prices have been hit by the market turmoil and worries about the possibility of a recession in the United States that have recently hit share prices, the dollar and consumer confidence.
Investors are more concerned about the prospects for the global economy than the particularities of the metals markets, traders and analysts said. "Copper follows the stock market, and all the other metals follow copper," a trader on the floor of the exchange said. "There is a natural correlation between economic growth and demand for metals."
On Wednesday, the US Federal Reserve will release its "Beige Book" survey of economic conditions, data which traders will watch keenly. "There is more US economic data due this week, which should help to refine the demand side of the equation," UBS metals strategist Robin Bhar said.
Even if demand for metals slows in the West, producers hope Chinese consumption will pick up the slack, though refined copper imports into China fell 4 percent in October from the previous month, customs data showed.
"While this still represents very strong imports of refined copper, we do not believe it is enough to offset the downturn we are seeing in demand in the major developed world consuming countries," analysts at Macquarie Bank said in a note.
Meanwhile, mining firms are betting on a long-term need for metals from industrialising economies, China in particular. Brazilian miner CVRD, the biggest producer of iron ore as well as an important source of nickel and other minerals, said on Monday that Chinese demand would consume and outstrip supply for years to come.
"Even if we keep investing more and more we'll never keep up with Chinese growth," Chief Executive Roger Agnelli told a news conference. Rio Tinto's chief executive Tom Albanese echoed this view, telling analysts he expected bouyant demand for commodities to last for decades.
Aluminium ended the day $15 up at $2,510 per tonne while steelmaking raw material nickel was down at $28,850/28,855 versus Friday's $29,100. Lead was up $65 at $3,000 per tonne, after it earlier rose more than 4 percent to $3,078, boosted by talk that China may be considering to raise export taxes on the metal, Bhar said.
Zinc jumped almost 5 percent to $2,389 per tonne, up $109 from Friday, lifted by bargain hunting and short covering and tin was down at $16,600/16,700 versus $16,680.
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