By Bloomberg News
Nov. 26 (Bloomberg) -- 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 $8,220.25 a metric ton on the London Metal Exchange, and traded at $8,226 at 11:07 a.m. in Shanghai. The contract has fallen 2 percent this week. Three-month zinc declined 3.5 percent today to $2,118 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 that the bailout fund set up in May isn?t large enough to rescue the euro region?s fourth-largest economy. The euro traded near a two-month low, down 0.2 percent to $1.3329 as of 10:07 a.m. in Shanghai.
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, to 12 percent for steel-reinforcing bars and zinc, and to 13 percent for rubber, after the market closes next Monday. Daily price move limits for all products will widen to 6 percent from Tuesday.
Curb Speculation
?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 fell as much as 1.3 percent to 61,780 yuan ($9,284) a ton, and traded at 61,800 yuan. It lost 3.5 percent this week.
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 on 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.
Aluminum in London fell 0.5 percent to $2,270 a ton, and lead slid 1.3 percent to $2,300 a ton. Nickel lost 2.0 percent to $22,376 a ton, and tin hadn?t been traded as of 10:10 a.m. in Shanghai.
--Helen Sun. Editors: Richard Dobson, Matthew Oakley.
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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