Copper prices hit a record high on fresh fund buying on Thursday, but the market then lost some gains as some investors rushed to cash in profits after a breathless rally.
Other commodities such as oil and gold, which hit all-time highs earlier on Thursday, also came off sharply from their highs. Copper for delivery in three months was at $8,560 per tonne at the close, down from an earlier record high of $8,820 and from Wednesday's close of $8,690 per tonne.
"We had a very strong day yesterday and I guess there is a little bit of consolidation and profit-taking occurring," said John Kemp, economist at Sempra Metals.
Copper has gained around 5 percent this week and is up more than 32 percent since the start of this year, thanks to investment money pouring into commodities and low stocks.
But analysts saw the pull-back as a brief pause. "The copper market remains beholden to falling LME inventory and ongoing fears of supply disruptions," analyst Daniel Hynes at Merrill Lynch told Reuters.
"It also reflects the bigger issue of surging investment into the commodity markets as investors seek refuge from weak equity and bond markets, rising inflation and a weak US dollar."
"A lot of people are saying copper could go to $10,000," an LME trader said. Copper stocks in LME-registered warehouses fell by 2,350 tonnes to 135,800, down by about a third since the start of the year and enough for less than three days of world consumption.
"In reality, there is not much spare metal around," head of resources John Meyer at Fairfax said in a report. "Copper prices are being pushed by investment demand but this is supported by ongoing demand growth for infrastructure development."
Nickel futures rose to a seven-and-a-half-month high of $35,150 and ended the day at $33,000 against Wednesday's $33,400. Three-months aluminium was flat at $3,208. The metal hit an all-time high of $3,310 in May 2006. Prices were supported by the surge in US crude to a record high above $105 per barrel.
"Structural tightness in global energy markets and subsequent shifts higher in costs are already constraining metals supply, especially for energy-addicted aluminium," a Barclays Capital report said.
Aluminium's precarious supply outlook combined with the strongest long-run demand prospects of all the base metals is a recipe for a tighter market and higher prices, it said.
Barclays Capital raised its aluminium annual price forecast for 2008 and 2009 to $3,513 per tonne and $4,500, respectively. Leading European shares were down with the FTSEurofirst 300 falling 0.46 percent to 1295.02 points by 1312 GMT. The dollar hit lifetime lows versus the euro on a weak US economy and worries about a recession, which has galvanised the US Federal Reserve to cut borrowing costs sharply to 3 percent, with further easing expected.
"The market is looking at rising inflation," said Ashok Shah chief investment officer at fund manager London & Capital. "Falling interest rates will encourage global growth rates to accelerate later but for now everyone is looking to inflation hedges ... across the board to all commodities," he said. In industry news, Kazakhmys Plc, the world's 10th biggest copper producer, posted a 0.7 percent rise annual earnings per share.
Tin hovered close to its all-time high of $19,375. It hit an intra-day high of $19,350 before closing at $19,150 per tonne, down $100 from Wednesday. Zinc lost $115 to $2,700 and lead shed $110 to $3,240.