FX: METALS-Copper weakens on China worries, U.S. proposals
MARKETS-METALS (UPDATE 7)
* U.S. bank regulation proposals hit equities, hurt metals
* Copper stocks dip, but are near highest since late Feb '09
* Cancelled warrants of copper rise
(Updates prices, zinc)
By Michael Taylor and Rebekah Curtis
LONDON, Jan 22 (Reuters) - Copper was softer on Friday, having hit a one-month low on worries China might temper its consumption, while proposed U.S. bank regulations stemmed investor appetite for risky assets.
Copper for three-month delivery on the London Metal Exchange was trading at $7,260 a tonne at 1417 GMT from $7,265 at the close on Thursday. The metal used in power and construction earlier touched $7,194, its lowest since Dec. 24.
Investors are concerned China might tighten credit to prevent its economy from overheating, a move that could cool demand from the world's top consumer of copper.
Chinese buying helped copper rocket 140 percent in 2009, and investors expect the country's demand to stay strong in 2010.
"Sentiment is a bit battered and bruised," said Charles Kernot, an analyst at Evolution Securities. "People are worried that China's going to take some rice out of the bowl, in terms of the amount of money flowing around the Chinese economy."
"If that rice bowl is taken off the table people go hungry, as it were, and commodity demand isn't there," he said.
Stoking concerns the country may tighten its monetary policy, which would dampen metals consumption, was data on Thursday that showed Chinese growth surged in the fourth quarter of 2009.
"Strong Chinese growth and output data failed to generate a lot of optimism in industrial metal markets, instead fuelling concerns over more potential monetary tightening," ANZ said in a note.
POTENTIAL U.S. REGULATIONS
Markets also fell after U.S. President Barack Obama proposed new restrictions on banks.
Strategists and fund managers said Obama's plans, to restrict banks or financial institutions from investing in, owning, or sponsoring a hedge fund or a private equity fund, could constrain fund flows into commodity markets.
For a graphic on the proposal's impact on commodities, see:
On Thursday, cancelled warrants of copper in LME warehouses, -- metal tagged for delivery -- rose to 12,075 tonnes from 7,150 tonnes the day before, with the largest bulk of cancelled tonnage at Busan in South Korea.
"It indicates still decent demand in Asia," said David Thurtell, an analyst at Citi. "Copper stocks out for the last few months of last year were pretty low, and if it's picking up now, that's bringing more balance to the market."
Indicating that demand outside China remains weak, LME copper stocks continue to forge higher. Inventories fell 450 tonnes, but at 534,200 tonnes levels are around the highest since late February 2009.
Aluminium was at $2,214 from $2,238 after earlier touching $2,202, its lowest in more than six weeks.
LME inventories of the metal used in transport and packaging fell 5,675 tonnes, but stand above 4.6 million tonnes after hitting a record high this week.
A large chunk of those stocks are tied up in finance deals, to release cash for producers and to earn banks higher returns than they would get in money markets.
Steel making ingredient nickel was at $18,275 from $18,900. Nickel stocks rose 564 tonnes to a new record high at 162,270 tonnes, while zinc inventories added 1,100 tonnes to 491,200 tonnes -- the highest since October 2005.
Battery material lead was at $2,230 from $2,255, while tin was at $17,675 from $17,750.
Zinc, used to galvanise steel, fell nearly 5 percent to a six week low of $2,289. It was last at $2,315 from $2,400.
For the latest metals column, click on Metal Prices at 1424 GMT Metal Last Change Percent Move End 2009 Ytd Percent
move COMEX Cu 329.95 0.45 +0.14 334.65 -1.40 LME Alum 2208.00 -30.00 -1.34 2230.00 -0.99 LME Cu 7257.00 -8.00 -0.11 7375.00 -1.60 LME Lead 2220.00 -35.00 -1.55 2432.00 -8.72 LME Nickel 18250.00 -650.00 -3.44 18525.00 -1.48 LME Tin 17600.00 -150.00 -0.85 16950.00 3.83 LME Zinc 2303.00 -97.00 -4.04 2560.00 -10.04 SHFE Alu 17060.00 -405.00 -2.32 17160.00 -0.58 SHFE Cu* 59480.00 -1470.00 -2.41 59900.00 -0.70 SHFE Zin 19810.00 -920.00 -4.44 21195.00 -6.53 ** 1st contract month for COMEX copper * 3rd contract month for SHFE AL, CU and ZN SHFE ZN began trading on 26/3/07
