By Anna Stablum Nov. 27 (Bloomberg) -- Copper posted the biggest drop in almost a month in London after Dubai’s attempt to delay debt repayments rattled investors and sapped their appetite for assets perceived to carry greater risk. The MSCI World Index of shares fell to the lowest since Nov. 9 on speculation Dubai’s proposal may trigger the biggest sovereign default since Argentina in 2001. The U.S. Dollar Index, a six-currency gauge of the greenback’s value, extended its rebound from a 15-month low. “People are cutting risk, which includes metals, and buying the U.S. dollar,” said David Thurtell, an analyst at Citigroup Inc. in London. Copper for three-month delivery fell $90, or 1.3 percent, to $6,731 a ton on the London Metal Exchange at 11:33 a.m. local time. The contract dipped as much as 3 percent, the biggest drop since Oct. 30. Copper for March delivery dropped 3.9 percent to $3.0725 a pound on the New York Mercantile Exchange’s Comex division. The market was shut for Thanksgiving yesterday. Dubai World, with $59 billion of liabilities, will ask creditors for a “standstill” agreement as it negotiates to extend maturities, Dubai’s Department of Finance said Nov. 25. “There are still a fair few borrowers out there with pretty significant debts that need refinancing,” Michael Jansen, an analyst at JPMorgan Securities Ltd. in London, said by phone. “The honeymoon period in this risk recovery mode has come to a close.” ‘Healing of Markets’ “The healing of financial markets has encouraged people to in due course worry about inflation and pricing in some pretty substantial demand recovery,” he said. “These flare ups in financial markets are probably just back to reality checks.” The Reuters/Jefferies CRB Index of 19 commodities climbed 21 percent this year, the biggest annual gain since 2002. Copper inventories in warehouses monitored by the LME have increased for 20 consecutive weeks. Stockpiles rose 0.7 percent to 435,075 tons today, the highest since April 23. Canceled warrants, or metal due to be withdrawn from warehouses, total 1,375 tons, or less than 1 percent of the total, down from 21 percent in May, when shipments into China were at record highs. Stockpiles in Shanghai declined from the highest level since 2004 this week. Inventories of the metal fell 6,128 tons, or 5.7 percent, to 101,277 tons, the Shanghai Futures Exchange said in a report today. Nickel Retreats Among other LME metals for three-month delivery, nickel dropped 2.3 percent to $16,199 a ton. The contract earlier fell to $15,751, the lowest intraday price since July 22. LME nickel inventories rose 1.5 percent to 135,480 tons, the highest level since February 1995. Tin declined 1.5 percent to $14,750 a ton. The so-called backwardation, when metal for nearby delivery trades at a premium to the three-month price, was level for a second day yesterday, according to LME data. The last time the market was in contango, with nearby prices trading at a discount, was on June 22. The premium climbed to $730, a five-year high, on Sept. 22. Stockpiles of tin in LME-monitored warehouses have more than tripled this year to 26,805 tons. Lead fell 3.4 percent to $2,260 a ton, after shedding as much as 8.3 percent. Aluminum dropped 1.1 percent to $1,988 a ton and zinc shed 2.6 percent to $2,198.50 a ton. To contact the reporter on this story: Anna Stablum in London at astablum@bloomberg.net

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