METALS-Copper hits one-week low on U.S. government shutdown, fund selling
(Adds comment and U.S. prices throughout)
* U.S. government shutdown triggers big sell-off early
* Funds shun commodities at start of 4th quarter
* Upbeat U.S. data fails to reassure investors
NEW YORK/LONDON, Oct 1 (Reuters) - Copper fell to its lowest in a week on Tuesday as the U.S. government shutdown reignited concerns about the world's largest economy and sparked a wave of fund and institutional selling, offsetting upbeat U.S. manufacturing data.
Selling accelerated in early morning in New York as U.S. investors woke up to the government shutdown, the first in 17 years. Funds also shunned the commodities market on the first day of the final quarter of the year.
The size and the speed of the copper sell-off were conspicuous: Starting at 8:40 a.m. EDT (1240 GMT), prices fell $50, or 0.70 percent, to intraday lows in just 10 minutes. Some 10 percent of Tuesday's COMEX copper trading volume changed hands in that short time.
"Up until that point, the markets had been subdued in their reaction to government shutdown," Michael Turek, a trader at brokerage Newedge in New York, told Reuters.
"We (then) saw (fund) liquidation across the board."
Talk also circulated that a single commodities fund was having to liquidate positions. Gold sank 3 percent to its lowest in almost eight weeks, and oil dropped more than 1 percent.
Three-month copper on the London Metal Exchange (LME) was down slightly in European trading hours and deepened losses after the opening of the U.S. markets, tracking gold.
It fell to $7,147 a tonne, its lowest in a week, and was untraded at the close and last bid at $7,198, down from a close of $7,302 on Monday.
In New York, the most-active December contract on COMEX fell 1.5 percent to settle at $3.274 per lb. It touched a low of $3.249, its lowest in a week.
In contrast, U.S. equities were higher. The U.S. dollar was under pressure.
Copper prices were at risk of a sell-off after failing to pierce the $7,330 per tonne mark on Monday, T-Commodity consultant Gianclaudio Torlizzi said.
"I think copper fell so quickly, influenced by the steep fall in gold prices and because of U.S. investors taking profit at the end of the third quarter," he said.
In the U.S. government shutdown, federal agencies were directed to cut back services. Lawmakers failed to pass a temporary spending bill before a midnight deadline, threatening the salaries of more than a million workers.
The budget impasse raised concerns over whether Congress can meet a more important deadline in mid-October to raise the debt-ceiling. Failure to raise the ceiling could spark fears about a ratings downgrade. That could derail the U.S. economy's steady recovery and hurt demand for copper, which is used in plumbing and electrical wiring.
Upbeat U.S. data revealed the manufacturing sector last month expanded at its fastest pace in almost 2-1/2 years, but that was not enough to quell investors' concerns.
Traders expect copper trading volumes to wane this week as investors in top consumer China take a week-long holiday.
Data overnight showed manufacturing growth in China edged up only slightly in September, with the official Purchasing Managers' Index (PMI) below expectations, adding to worries Beijing's economic recovery had foundered.
Still, some analysts said the outlook for Chinese copper demand was better. China accounts for about 40 percent of refined copper demand this year.
Aluminium, untraded at the close, was last bid at$1,826, down from a close of $1,845 on Monday.
Zinc closed at $1,877, down from $1,918, and nickel at $13,750, down from $13,955.
Lead finished at $2,065, against a Monday close of $2,117, and tin at $23,050, from $23,350.
Three month LME copper
Most active ShFE copper
Three month LME aluminium
Most active ShFE aluminium
Three month LME zinc
Most active ShFE zinc
Three month LME lead
Most active ShFE lead
Three month LME nickel
Three month LME tin
(Editing by David Evans, James Jukwey and John Wallace)