Copper descends

Copper fell more than 2 percent on Tuesday as investors took profits at the start of the new quarter and some looked to other assets, analysts said. The London Metal Exchange-traded metal, mainly used in the power and construction sectors, rose by some 25 percent in the first quarter, its second largest quarterly gain ever.
Copper for delivery in three months fell to 8,160 per tonne before closing at $8,300, down $90 or 1 percent from Monday's close. "Equity markets are firmer. Money flows back into equities from commodities," said Nick Moore, metals analyst at ABN Amro, adding that many mining stocks were falling while financial sector shares were up.
Gains in banking shares propelled European stocks higher, as hopes that the worst of a flurry of asset writedowns might be over sparked a sharp rally in the financial sector. "Today people feel more comfortable with equities," he said.
Investors did not feel comfortable with commodities as a broad sell-off and a rise in dollar sent gold to a two-month low. Oil dipped below $100 a barrel. Taking profits at the end of a month or quarter, also known as a "window dressing" activity also weighed on prices. Many fund managers are evaluated at the end of each quarter so some had tried to keep prices high up until March 31.
"We have just seen the end of the first quarter and prices have been artificially supported," fund manager David Coates at New City Investment Managers. "I think we are seeing a lot of sector rotation - people have got a bit nervous in commodities and are looking for perhaps bargains in other sectors," Coates said.
The dollar rose versus the euro after Swiss bank UBS announced an additional $19 billion of writedowns, highlighting that credit market woes were not just a US problem. A firmer dollar typically hits base metals as it makes dollar-priced metals more expensive for holders of other currencies.
"The rebound in the US dollar has significantly destabilised the metals complex," metals analyst Michael Jansen at J.P. Morgan said. Market participants are concerned about slowing US growth impacting copper demand, John Meyer, head of resources at Fairfax, said in a report. "However, the US is expected to account for 11 percent of world refined copper consumption versus China at 28 percent and rising," he said, citing Bloomsbury Minerals Economics.
Investors keep a close eye on macroeconomic data coming from the United States. On Tuesday, an Institute for Supply Management report on US manufacturing inched up to 48.6 from February's 48.3 and despite the number remaining below the 50 mark, above which signals expansion, the market looked on the bright side.
US stocks got a further boost after the index was stronger than forecast. The Dow Jones Index was up more than 2 percent. Analysts said they have started to see signs of a pick up in the physical market as the second quarter, seasonally busy, kicks-off.
"Demand for copper from the electronics sector, and in particular circuit boards, has picked up," Barclays Capital said in a research note. With LME stocks standing at 111,350 tonnes, their lowest since August 2007 and just over two days of global consumption, analysts see further room for prices to go up. "We are bullish copper, tin and aluminium and expect further price gains through the second quarter as market balances tighten," Barclays said.