METALS-Copper falls most in 3 weeks as Fed reduces stimulus

Naveen Thukral
Wednesday, 18 Dec 2013 | 10:43 PM ET

* Copper extends losses as Fed cuts stimulus

* Optimism over global economy underpins prices

* Tight supplies provides floor under market

(Adds details, quotes)

SINGAPORE, Dec 19 (Reuters) - London copper lost more ground on Thursday, falling the most in nearly three weeks, as the Federal Reserve's decision to cut back its bond-buying stimulus weighed on the market although losses were limited by global economic optimism.

The Fed trimmed the pace of its monthly asset purchases by $10 billion to $75 billion, and sought to temper the long-awaited move by suggesting its key interest rate would stay at rock bottom even longer than previously promised.

Three-month copper on the London Metal Exchange fell 0.6 percent to $7,236 a tonne by 0332 GMT. Copper for February delivery on the Shanghai Futures Exchange slid 0.3 percent to 51,040 yuan a tonne.

"Like other commodities, copper is experiencing macroeconomic pressure from the Fed's decision to taper stimulus but there is underlying fundamental support from short-term refined shortage," said Joyce Liu, an investment analyst at Phillip Futures Singapore.

"We think the effects of Fed's decision on copper is fully revealed and do not expect further downside for this reason."

Copper touched $7,307.70 a tonne on Monday, its highest since Oct. 23. A pickup in global factory activity and a near-term shortage of refined metal has helped copper recover 4.6 percent from a three-month low of $6,910 a tonne struck last month.

German business morale improved in December, hitting its highest level since April 2012, in a sign growth in Europe's largest economy could accelerate next year.

Low availability of physical material for nearby delivery had supported copper in the last few days, pushing its forward curve into a steeper backwardation - the premium paid for cash over three-month copper. <CMCU0-3>

The losses in zinc market were also limited by tight supplies. Zinc fell 0.2 percent to $1,988 a tonne after climbing on Wednesday to $2,010 a tonne, highest since March.

The global zinc market was in deficit by 2,000 tonnes in the first 10 months of the year, a monthly bulletin from Lisbon-based International Lead and Zinc Study Group showed earlier this week.


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

(Reporting by Naveen Thukral; Editing by Ed Davies and Michael Perry)