Copper fell on Friday to a 10-day low on a sharp drop in US stocks and as poor macro economic data renewed fears about the strength of economic recovery in the United States. Benchmark copper on the London Metal Exchange fell to $6,490 a tonne, its lowest since July 6 and ended the day at $6,485 a tonne, from $6,680 on Thursday.
The metal used in power and construction has ranged between $6,300 and $6,900 since the middle of June. "Metals have been following equities and if earnings are not looking great then that would weigh on sentiment," said analyst David Wilson at Societe Generale. the big macro picture people are looking at, "At the moment copper fundamentals are not so relevant, it's " he said.
US stocks accelerated falls after Citigroup, Bank of America and General Electric all posted disappointing revenue, while consumer price data suggested sluggish domestic demand and pointed to a weak recovery. Traders are closely monitoring macroeconomic data for signs of strength in the economic recovery in the world's biggest economy and Friday's data did not provide a rosy picture. Consumer prices fell for a third straight month in June due to lower energy costs, according to a government report, and consumer sentiment weakened in early July to its lowest in 11 months on a resurgence in fears about the economy, a year since the recovery began.
The euro touched a two-month high versus a broadly weaker dollar before paring gains later in the session, while the dollar index erased earlier losses and moved into positive territory, making industrial metals cheaper for non-US currency holders. A weak dollar was not enough to prevent the losses, but traders did not see a massive drop as copper has been stuck in a range of around $500 since early June.
"I don't see it going below $6,400 a tonne area and even if it did we then could see some dip buying," an LME trader said. "There has been some buying from the Chinese lately, with prices going lower, we could see that speeding up." China is the world's largest consumer of industrial metals.
Chinese annual gross domestic product growth moderated to 10.3 percent from 11.9 percent in the first quarter, the National Bureau of Statistics (NBS) said on Thursday. The reading was slightly below market forecasts of 10.5 percent growth. "However counter intuitively perhaps, this suggests the Chinese government's measures to rein in spending have been successful, with the country perhaps now in a position to ease off and even loosen its purse strings over the balance of the year," Standard Bank said in a note.
Three-month aluminium was last bid at $1,978/1,979 a tonne from $2,018 at the close on Thursday, zinc traded at $1,797 from $1,810, tin at $17,750 from $17,950 and battery material lead was at $1,770 from Thursday's last bid at $1,798. Nickel fell to $18,950 from $19,400.