METALS-LME copper falls after Fed; fiscal cliff worries drag
* Stronger dollar weighs on metals
* Lead flirts with 15-month high as chart signals turn higher
* Coming up; U.S. Weekly jobless claims at 1330 GMT
(Adds comment, detail, updates prices) SINGAPORE, Dec 13 (Reuters) - London copper slipped on Thursday, bruised by the struggles of U.S. lawmakers to find a fix to a looming "fiscal cliff" and on a rebound in the dollar after it tumbled following the Federal Reserve's extension of loose monetary policy. As expected, the Fed committed to purchase $45 billion in longer-term Treasuries a month on top of the $40 billion in mortgage-backed bonds the U.S. central bank started buying in September. The dollar dropped after the move, before rebounding on Thursday, which eroded support for metals. A stronger dollar makes commodities more expensive for holders of other currencies. Also, talks aimed at resolving U.S. fiscal problems are proving protracted, pinning back optimism in the country's 2013 growth outlook and paring commodities' year end advance, said Thomas Lam, chief economist at DMG & Partners Securities. "The key thing here is the ongoing fiscal negotiation. Until they have some resolution, I think that is a dampener for the market," he said. "Our baseline is expectation for some resolution to the fiscal cliff, but there will still be a drag on the economy," he added. Sharp differences remained on Wednesday between congressional Republicans and the White House in talks to avert the "fiscal cliff" of steep tax hikes and budget cuts, and negotiators warned the showdown could drag on past Christmas.
Three-month copper on the London Metal Exchange fell small gains seen the previous session. Prices have rallied more than 6 percent since mid November and remain within reach of a near two-month high of $8,159 hit on Monday. The most-traded March copper contract on the Shanghai Futures Exchange slipped by 0.64 percent to 57,610 yuan ($9,200)a tonne. The U.S. Federal Reserve, announcing a new round of monetary stimulus, took the unprecedented step on Wednesday of indicating interest rates would remain near zero until unemployment falls to at least 6.5 percent. The Fed also downgraded its growth projections slightly across the three years to 2015 which clouded the outlook for metals demand, Lam added. Fed policymakers see GDP expanding between 2.3 percent and 3.0 percent next year. That is down from the 2.5 percent to 3.0 percent they forecast in September, but is still a bit more optimistic than most private forecasters. Highlighting the slowdown in industrial metals demand in other regions, euro zone factory output continued its steep fall in autumn this year, underscoring the feeble domestic demand that risks prolonging the bloc's recession.
LEAD FLIRTS WITH 15-MONTH HIGH Lead supplies have eased since tightening over September, when consumers bought stocks to prepare for the peak winter season for battery replacement demand, so the current price move, built on fundamentals, is now moving more on technical signals, traders said. LME lead hit $2,328.50 a tonne on Wednesday, its highest since Oct. 2, thwarted by chart-based resistance at $2,329 that also held twice in January. "Given there is no obvious tightness in the market right now and purchases today on the LME will not be delivered until March, when the peak demand season has mostly passed, this looks more like a speculative move," said senior strategist Nick Trevethan at ANZ in Singapore. "We cleared resistance at around $2,250 a tonne just under a week ago and the market appears to be running a positive technical profile that is running into fairly stiff resistance at $2,329," he added.
Base metals prices at 0337 GMT
Metal Last Change Pct Move YTD pct chg LME Cu 8079.25 -50.75 -0.62 6.31 SHFE CU FUT MAR3 57610 -370 -0.64 4.06 HG COPPER MAR3 368.45 -3.15 -0.85 7.23 LME Alum 2132.00 -6.00 -0.28 5.54 SHFE AL FUT MAR3 15360 -20 -0.13 -3.06 LME Zinc 2068.50 -26.50 -1.26 12.11 SHFE ZN FUT MAR3 15435 -110 -0.71 4.33 LME Nickel 17646.00 -54.00 -0.31 -5.69 LME Lead 2305.00 -17.00 -0.73 13.27 SHFE PB FUT 15320.00 -30.00 -0.20 0.23 LME Tin 22850.00 -285.00 -1.23 19.01 LME/Shanghai arb^ 1463
Shanghai and COMEX contracts show most active months
($1 = 6.2518 Chinese yuan)
(Reporting by Melanie Burton; Editing by Richard Pullin and Ed Davies)