By Chanyaporn Chanjaroen Feb. 5 (Bloomberg) -- Copper dropped in London, heading for a fourth weekly decline, as rising job losses in the U.S. and widening deficits in Europe fueled investor concern that the pace of the global economic recovery is slowing. Copper has given up more than 14 percent this year as equities and oil also dropped. U.S. first-time claims for unemployment insurance rose to the highest level in seven weeks, the Labor Department said yesterday. The dollar is at an eight- month high against the euro amid concern that widening government deficits will hamper Europe’s recovery. “Commodities were trading too high relative to the economic environment,” said James Parsons, a fund manager at BlueCrest Capital Management Ltd. in London. “At what levels prices will be supported, I don’t know.” Copper for delivery in three months fell $141, or 2.2 percent, to $6,249 a metric ton as of 10:29 a.m. local time. That was the lowest intraday price since Oct. 19. Prices for the March-delivery futures declined as much as 2.4 percent to $2.8110 a pound on the Comex division of the New York Mercantile Exchange. Copper retreated 18 percent from its most recent peak of $7,660 a ton traded on Jan. 6. The metal is $121 away from entering a bear market, defined as a 20 percent drop from the high. The metal’s loss this year surpassed oil’s 8.3 percent drop and the 6.1 percent slide in the MSCI World Index of equities. Prices more than doubled last year as Chinese imports of the metal climbed to a record during the first half. China Tightening Apart from concern over debts and credit worthiness in Europe, China’s tightening monetary and credit policy gave investors another worry, said Parsons, who manages $500 million in BlueCrest’s trade-finance fund. Chinese banks curbed lending last month as the government sought to cool down its economic expansion as inflation accelerates. The May-delivery contract on the Shanghai Futures Exchange tumbled as much as 4.8 percent to 51,360 yuan ($7,523) a ton, the lowest level since Nov. 13. It closed at 51,880 yuan. LME-monitored copper inventories added 0.3 percent to 541,150 tons, according to the bourse’s daily report. Including those tracked by exchanges in New York and Shanghai, they totalled 750,855, the highest since January 2004, according to data compiled by Bloomberg. The LME said today that Chairman Donald Brydon will leave the bourse in the next several weeks to focus on his roles at other companies and the process of replacing him is “well advanced.” Brydon was made LME chairman in 2003. Dollar ‘Trigger’ The U.S. Dollar Index, a gauge of the currency against a basket of six major currencies, climbed for a third day by as much as 0.7 percent to 80.435, the highest since July. The dollar’s strengthening discourages purchases of metals as a hedge against currency weakness. The rebounding dollar “was a trigger for selling across the commodity complex,” Anne-Laure Tremblay, an analyst at BNP Paribas SA in London, wrote in an e-mailed report. U.S. non-farm payrolls and the unemployment rate, due for release later today, “will be key for the direction metals will take,” she said. U.S. payrolls may have increased by 15,000 workers last month, the second gain in the past three months, according to the median forecast of economists surveyed before the report. The economy has lost 7.2 million jobs since the recession began. Aluminum lost as much as 2.3 percent at $1,997.5 a ton, the lowest since Nov. 27. Zinc dropped 0.8 percent to $2,004 a ton. Lead declined 0.7 percent to $1,950 a ton, nickel tumbled 3 percent to $17,200 a ton and tin slid 2.3 percent at $15,800 a ton. --With assistance from Li Xiaowei in Shanghai. Editors: John Deane, Claudia Carpenter. To contact the reporter on this story: Chanyaporn Chanjaroen in London at +44-20-7073-3544 or cchanjaroen@bloomberg.net.

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