Copper declines

Copper touched its lowest in a week on Tuesday, as the dollar rose against a basket of currencies and attention returned to the uncertain outlook for the global economy, prompting investors to reduce their exposure to assets perceived as risky.
Benchmark copper on the London Metal Exchange closed at $8,830 a tonne, down 0.80 percent from Monday's close of $8,909. Earlier, it hit a session low of $8,751 per tonne, its lowest in a week. The metal used in power and construction eased on the back of a firmer dollar after worse-than-expected German growth data raised fears of a slowdown and added pressure to policymakers to come up with a solution to the eurozone's debt crisis.
Reflecting the cautious stance in markets, European stocks fell sharply, with investors awaiting a Franco-German summit later in the day at which President Nicolas Sarkozy and Chancellor Angela Merkel will meet to discuss potential solutions to the region's debt crisis.
"There is uncertainty after the big sell off of the last couple of weeks," said analyst Stephen Briggs of BNP Paribas in London. "One of the triggers for weakness in European markets was the German GDP data...economic data is tending to come out on the weak side."
Last week, copper eased on fears about the global economy and growth prospects in China, which accounts for nearly 40 percent of total global copper demand estimated at around 19 million tonnes this year. But with three-month LME copper still trading at a discount to the November copper contract on the Shanghai Futures Exchange, there remains an incentive for the Chinese to import although price-sensitive buyers will likely wait for costs to stabilise.
"The appetite hasn't been there. The Chinese are quite price sensitive. They bought aggressively on the dip late last week and they have stepped away again so that support isn't there anymore," Westgate said. LME copper is trading 8 percent lower in the year to date after losing more than 10 percent so far this month.
The arbitrage has been open since early this month and traders say that may boost China's refined copper imports in the fourth quarter as buyers increase spot bookings. Supporting copper, data showed US industrial output rose in July at its fastest pace in seven months while US housing starts fell less than expected last month.
Also, Fitch Ratings affirmed the United States' top-notch credit rating at AAA, giving the world's largest economy a reprieve after it was downgraded by Standard & Poor's little more than a week ago. This string of positive news however, was not enough to boost investor risk appetite and copper remained in negative territory.
Gains in copper on Monday lifted the metal to within a whisker of $9,000, seen as a resistance level, and hit a session high at $8,980, well shy of the record $10,190 hit in February. "Prices don't look yet in position to challenge the most immediate resistance just above $9,000. Most likely reason is the lack of substance to justify yet a rally of significance," Triland said in a note.
LME data showed a rise of 4,675 tonnes for copper stocks held at LME warehouses in Rotterdam, in the traditionally quiet summer period when demand is typically weak. Aluminium closed at $2,375 a tonne, unchanged from Monday's close. Data showed a rise of 21,675 tonnes of the metal into LME warehouses in Detroit.
Tin finished at $24,150 from $24,400, while battery material lead ended at $2,356 from $2,397. Zinc , used to galvanise steel, closed at 2,181, from $2,183 on Monday, nickel at $21,700, up from $21,300.