US copper futures closed down over 3 percent as a firm dollar and inflationary fears rattled metals markets across the board on Tuesday, while traders largely ignored news of a force major at Grupo Mexico's Cananea mine, sources said.
Copper for July delivery lost 11.15 cents, or 3.09 percent, at $3.4895 a lb. on the New York Mercantile Exchange's (Nymex) Comex division, after dealing from an intra-day low at $3.44 to its session peak at $3.5890.
Since rallying to a life-of-contract high at $4.04 on May 11, the benchmark July copper contract has given back almost 14 percent, and has recently been seen consolidating in a wide range between $3.30 and $3.80.
Spot June lost 10.65 cents at $3.5845, after moving between $3.5450 and $3.6680. Comex final copper volume was estimated at 10,000 lots, in line with the 10,946 lots recorded on Monday.
Meanwhile in afternoon trade in New York, the euro was down 0.58 percent against the dollar at around $1.2830 after a Federal Reserve policy-maker was quoted as saying it was safer to err on the side of "going a little too far" in fighting inflation.
That bolstered expectations that the Fed will likely extend its campaign of 16 straight rate hikes at its next meeting on June 28-29 by raising its overnight rate from 5 percent to 5.25 percent.
"I think the inflationary fears that have been tugging at the markets over the last couple of days have probably put the heebie-jeebies on a few traders and created some necessary liquidation," said one Comex broker.
On the supply-side, London Metal Exchange-monitored warehouse stocks fell by 750 tonnes to 107,525 tonnes on Tuesday, while Comex inventories were down by 21 short tons at 9,071 tons in Monday's data.
LME three-month copper closed at $7,510 a tonne, down $270 from Monday's kerb close.