London copper fell 7.6 percent on Thursday to its lowest since January 2006 and other base metals also dropped after the Fed warned that the US economy still faces significant threats. Combined with bleak US economic data, the Fed warnings led Wall Street to its worst day since the 1987 stock market crash, wiping out earlier optimism fuelled by government steps to avert a financial meltdown.
Fears of a more protracted and global slowdown than initially expected also sent Japan's Nikkei share average tumbling 11 percent in its biggest one-day fall since the 1987 crash, worsening the outlook for industrial commodities demand. Copper for delivery in three months on the London Metal Exchange fell to $4,545 a tonne, after having lost $378, or 7 percent, on Wednesday. The metal pared losses to $4,570 by 0708 GMT.
Expectations of weaker global demand for metals were reinforced after leading global copper producer Codelco said the premium for refined copper in Europe will be lower at around $80 a tonne in 2009. Bullish news that workers had shut Chile's top mining port on Wednesday, delaying a copper shipment for at least one multinational company, was lost in the stream of negative data.
LME zinc fell 5.7 percent to $1,245, a fresh three-year low, while lead fell 7.9 percent to $1,396. Nickel slid almost 6 percent to $11,250 per tonne. Strategic Resource Acquisition Corp said the credit crisis and falling zinc prices forced the company to reduce its Gordonsville zinc mine operations.
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