Copper prices closed one and a half percent lower on Friday as investors worried about falling demand and slow global economic growth after key United States manufacturing data, analysts said.
Nickel for three-month delivery also closed lower after hitting a new record high of $34,300 a tonne in early trade. Nickel fell to $33,900 at the close on the London Metal Exchange, just below Thursday's $33,950.
Copper was at $6,975, down from $7,080. The Institute of Supply Management's manufacturing index came in below expectations at 49.5 in November from 51.2 in October. It is the first time it has fallen below the 50-point threshold dividing expanding activity from a contraction in more than three years.
The fall was expected given the difficulties in the manufacturing sector and evident in the regional survey from the ISM's Chicago branch, economist John Kemp at Sempra Metals said.
"It highlights the current pressures on American manufacturers and it will intensify the downward pressure on the already-troubled US dollar," Kemp said in a note.
A weaker dollar, which normally would boost base metals prices, has been sidelined as the market focuses on the rising probability of a hard landing in the United States.
A falling US currency makes dollar-denominated base metals cheaper for holders of other currencies.
In the nickel market supply disruptions and stock shortages propelled prices to new record highs.
Supply worries were reinforced after London-listed BHP Billiton said production at its Ravensthorpe nickel mine in Australia would be delayed to the first quarter of 2008.
Stocks of nickel at LME warehouses stand at 6,066 tonnes. But only 4,830 tonnes, less than two days of global consumption, are available to the market.
"(Supply concerns) haven't gone away...It's really been a focus for the last number of years now, all the delays and disruptions," said Robin Bhar, analyst at UBS.
"(But) we suspect that concerns on supply may now switch to concerns over demand and demand growth in an environment of slower economic growth."
The spotlight was likely to fall mostly on copper, especially as traders were focusing on rising stocks, which at LME warehouses have risen to nearly 160,000 tonnes from little more than 25,000 in July last year.
Dealers were watching wage negotiations at the world's largest copper mine, Chile's state-owned Codelco, where a deal has to be agreed before December 31.
The possibility of disruptions and a tighter concentrate market has over the last few weeks supported copper, which fell to a 4-1/2 month low of $6,645 a tonne on November 17.
"The market has seemingly embraced forecasts for a copper concentrate shortage in 2007," Deutsche Bank said in a research note.
"Copper has continued its recovery from the sell-off three weeks ago, although sentiment remains mixed against a raft of recent US economic data."
Aluminium gained 2.6 percent to $2,815 from Thursday's $2,738 close.
"I think the interest in the market has switched to far forward copper (contracts) and aluminium," Kemp said.
Tin was quoted at $10,675/10,700, up from $10,500, and zinc gained $25 to $4,400.