Copper fell to its lowest in more than 3 months on Friday as a stronger dollar and worries over the health of the global economy outweighed mixed US jobs data. Benchmark copper ended at $6,265 a tonne from $6,390 at the close on Thursday. Earlier, the metal used in power and construction tumbled to $6,225 a tonne, its lowest in more than three months.
US employers unexpectedly cut 20,000 jobs in January, but the unemployment rate surprisingly fell to a five-month low of 9.7 percent, data from the Labour Department showed. "An unemployment rate below 10 percent is not a bad sign - it was generally mixed jobless (data), but overall, in the wider scheme of things it did not really matter," said Michael Widmer, analyst at BofA Merrill Lynch.
Selling of commodities and equities has been accelerating since European Central Bank President Jean-Claude Trichet made comments Thursday that reinforced worries about the indebtedness of certain economies in the eurozone. "Losses have been driven by risk aversion, you have the dollar quite strong and there are a lot of concerns about debt conditions in Europe and potentially elsewhere," said Dan Brebner, analyst at Deutsche Bank. "There was a significant amount of confidence in the US economy. Investors are questioning that ... There's an element of panic behind the selling."
Also weighing on metals are expectations that central banks and governments around the world will drain liquidity from markets, which have been fuelled by some policy tightening in China and in Britain. Copper prices have fallen about 25 percent since the 2010 high of $7,796 hit on January 7.
"Concerns over Chinese policy tightening, the potential for a European sovereign default and uncertainty over US policy have put downward pressure on commodity prices even as near-term fundamentals improve," said Goldman Sachs in a note. Copper stocks in LME warehouses are more than double the levels in the middle of July last year, but over the last couple of weeks they have hovered around 540,000 tonnes.
Stocks of aluminium, used in transport and packaging, fell 7,900 tonnes to 4.58 million tonnes. Aluminium ended at $1,980 a tonne from $2,045 a tonne on Thursday, having earlier hit a two-month low of $1,967.50, while zinc finished at $1,940 from $2,021, having earlier hit $1,935, its lowest since early October.
Lead ended at $1,940 from $1,964.50, having dropped to a five-month trough of $1,920.50, while nickel ended at $17,005 from $17,725, having dropped to $17,020, a level last seen on December 18. Tin ended at $15,350 from $16,150, having earlier hit $15,300, its lowest since mid-December.