Aluminium touches three-month low on rate hike worries, copper up

Aluminium fell to its lowest in three months on Monday and other industrial metals also dropped as speculation about a US rate hike this month prompted investors to shed risky assets. Copper slipped to its lowest level in more than two months while nickel marked its biggest one-day decline in a month.
"The market's got spooked that there's going to be a September rate hike, but none of the macro data supports that," said analyst David Wilson at Citi in London.
"Our economics team don't think there will be a hike (in September), so it's probably a flash in the pan. Some of the weakness looks a bit overdone with one or two exceptions."
Selling spread through wider financial markets, with European stocks and bonds hit by growing concerns that global central banks' commitment to the post-crisis orthodoxy of super-low interest rates and asset purchase programmes may be waning.
Higher interest rates raise financing costs in the cash intensive metals industry and are likely to dampen activity and prices.
Benchmark aluminium on the London Metal Exchange closed down 0.6 percent at $1,568 a tonne, the weakest since June 13. It declined 0.8 percent on Friday.
Aluminium is the worst performing LME metal over the past month as investors also worry about restarts of smelters in China, the biggest producer and consumer of the metal.
Three month copper bucked the weaker trend and finished up 0.3 percent at $4,647.503 a tonne, rebounding after falling to $4,582, its weakest level since June 20.
Adding to jitters, China's central bank chief economist said the country should take steps to curb the flow of capital into the property market and state-owned companies to help slow the rise of debt levels in the economy.
Emerging Chinese copper demand after a summer factory lull looks set to fuel a recovery in China's copper imports this month, but that may not be enough to offset the impact of an expected flood of new supply this year.
Zinc slipped 1.3 percent to end at $2,262 and charts currently signalled some further downside, said Staphanie Aymes, head of technical analysis at Societe Generale in London.
"Formation of a weekly bearish engulfing pattern... suggests a correction lower is happening," she said in a note.
Nickel slid 2.6 percent to close at $10,100, marking its biggest one-day decline in a month, lead dropped 1.1 percent to $1,882 and tin fell 1.3 percent to $19,050.