Base metals buckle

Industrial metal prices fell on Wednesday in a sell-off triggered by a German ban on risky bets in bond, stock and credit markets and on concerns about the growth prospects in Europe. But losses were pared as the euro rallied, rebounding from a four-year low against the dollar as investors debated how a German ban on naked short selling of some securities would ultimately impact markets.
A weaker dollar makes metals priced in the currency cheaper for non-US investors. Benchmark copper on the London Metal Exchange was last quoted at $6,500/6,505 a tonne at the close, having trimmed its losses after hitting a low of $6,460 a tonne earlier, but was still down $90 compared with Tuesday's close.
"There's just a lot of unknowns that investors are trying to get a handle on," said metals analyst Daniel Brebner at Deutsche Bank. "The big part of the fall is because of a macro issue; growth prospects as a consequence of debt overhang," he said. Germany has banned some types of short selling - bets on lower prices - to fight speculation, which it blames for much of Europe's debt crisis. Analysts said, however, the move could backfire by draining funds out of the eurozone.
"The prospects for liquidity are quite serious," Brebner said. "If you start to see the liquidity that the market's been supported, start to dissipate, that could have an impact on markets in terms of how they would trade," he said, Copper is down nearly 20 percent since hitting a year high above $8,000 a tonne in the middle of April.
Nickel, the star performer of this year, is still up by 15 percent since the start of the year, despite losing more than 22 percent since mid-April, when it touched its highest since May 2008. Other major metal aluminium is down by 1.3 percent on the year, nearly erasing 12 percent of gains earlier this year. On LME, three-months nickel, a key stainless steel ingredient, ceded about 6 percent to $20,781 a tonne, before paring losses to $21,300 a tonne, from Tuesday's $22,145.
Steel ingredient zinc closed at $1,860 a tonne, after falling nearly 6 percent to a nine-month low of $1,823.75 a tonne and versus Tuesday's close of $1,939. Battery material lead fell more than 6 percent to $1,721.25 a tonne, its lowest since last July and ended the day at $1,755 a tonne versus Tuesday's $1,835 a tonne. Aluminium fell to $2,001 a tonne from $2,052 on Tuesday and tin was at $17,450 from $17,500.