Copper dropped, heading for a third weekly decline, as concerns that Ireland’s debt crisis may spread to other European nations weakened the euro, and as China expanded measures to curb speculation. Zinc and nickel fell. The metal for three-month delivery dropped as much as 1.4 percent to $8,220 a metric ton on the London Metal Exchange, and traded at $8,240.25 at 12:56 p.m. in Shanghai. The contract has fallen 2 percent this week. Three-month zinc declined 2.5 percent to $2,140 a ton. “The outlook domestically in China is quite negative and the dollar gains in the short term may weigh on copper prices,” Zhao Kao, an analyst at Jinrui Futures Co., said by phone from Shenzhen. A stronger dollar makes base metals priced in the greenback more expensive for holders of other currencies. European Central Bank council member Axel Weber said yesterday governments can increase the size of the European Union-led bailout fund if necessary to restore confidence in the euro, after Ireland applied to the European Union for a rescue. Contagion from Europe’s sovereign debt crisis is spreading to Spain, sparking concern the bailout fund set up in May isn’t large enough to rescue the region’s fourth-largest economy. The euro traded near a two-month low, down 0.3 percent to $1.3320. The dollar rose to a seven-week high against the yen, and gained versus 15 of its 16 major counterparts today as the U.S. sent an aircraft carrier to participate in military exercises off the Korean peninsula in a show of strength after the North this week shelled a South Korean island. Curb Speculation The Shanghai Futures Exchange, where the world’s top three metals contracts are traded, said yesterday it will increase margins and daily price limits in the latest move by China to curb speculation and cool inflation. Margins on copper, aluminum, steel wire, gold and fuel oil will rise to 10 percent, on steel-reinforcing bars and zinc to 12 percent and on rubber to 13 percent after the market closes on Monday. Daily price move limits for all products will widen to 6 percent from Tuesday. “A further cut of leverage shows the regulator is still aiming at reducing speculation,” Zhao said. “This will have some impact on the fund flow.” Copper for March delivery in Shanghai declined 0.3 percent to 61,900 yuan ($9,302) a ton at the midday break. The contract has lost 3.6 percent this week. Nickel-Use Cut Codelco, the world’s biggest copper producer, said yesterday output for the first nine months of this year fell 0.5 percent from a year ago to 1.208 million tons because of a decline at its Andina division. Output by the state-owned company this year and next year will be similar to 2009 “with some small variations,” Chief Executive Officer Diego Hernandez told reporters in Santiago. Posco, the world’s second-biggest maker of stainless steel, is seeking ways to cut its use of nickel because of volatile prices, Suh Young Sea, a senior vice president of the Pohang, South Korea-based mill, said in an interview yesterday. The company will increasingly focus on so-called 400-series stainless products, which use ferrochrome as a raw material and are used in home appliances and cars, and other products that use less nickel, Suh said. Nickel is the second-best performer on the London Metal Exchange this year, rising 21 percent, driven by rebounding demand from stainless-steel mills. The metal fell 1.6 percent to $22,455 a ton today. Aluminum in London dropped 0.5 percent to $2,270 a ton, lead slid 1.1 percent to $2,305 a ton, and tin lost 1.1 percent to $24,050 a ton. --Helen Sun. Editors: Richard Dobson, Jarrett Banks. To contact the Bloomberg News staff on this story: Helen Sun in Shanghai at hsun30@bloomberg.net To contact the editor responsible for this story: James Poole at jpool4@bloomberg.net

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