Copper prices slipped 1.5 percent in Europe on Wednesday as weakness in Asian and European stocks, a rising dollar and fresh losses in oil reflected growing risk aversion in the wider financial markets.
Other industrial metals were also weaker, with nickel falling more than 3 percent and aluminium, zinc and lead all posting losses.
"This is not surprising, given weakness in equity markets, the performance of base metals in Shanghai, and the stronger dollar today," said Commerzbank analyst Eugen Weinberg.
"Risk aversion is on the market and is weighing on commodities, especially industrial metals and energy."
Shanghai zinc futures fell by their 5 percent limit on Wednesday and other metals also dropped, as day traders in China rushed to exit positions ahead of the midday break after equity markets gave up gains.
PRICES
* Three-month copper on the London Metal Exchange was trading at $6 635 a tonne at 09:08 SA time compared with $6 750 at the close on Tuesday.
* Aluminium was at $1 970.50 a tonne from $1 992.
DATA/EVENTS
* Euro zone PPI data for April, 11am SA time.
* US Challenger job cuts for May, 13:30 SA time.
* US ICSC/Goldman Sachs chain store sales for week ended May 29, 13:45 SA time.
* US Redbook weekly US retail sales, 14:55 SA time.
* US pending home sales for April, 16:00 SA time.
* US May auto sales data.
MARKET NEWS
* The dollar held firm near a 15-month high against a basket of currencies as market players shifted their focus to reports on the US labour markets due later this week, while the euro held steady against the US unit above a four-year low.
* Oil fell to $72, extending a nearly 2 percent drop in the previous session on gains for the dollar and negative sentiment pervading financial markets.
* Asian stocks followed Wall Street down as jitters over the euro zone's debt crisis prompted investors to keep cutting riskier positions, while the yen weakened broadly after Japan's Prime Minister Yukio Hatoyama said he would resign.
* European shares fell at the open, with the FTSEurofirst 300 down 0.9 percent in early trade and London's FTSE 100 losing 1.4 percent.
FUNDAMENTALS
* Indian state-run National Aluminium has issued a tender to export 9 000 tonnes of aluminium ingots, a company source said on Wednesday.
* China will allow only a few state-owned enterprises to mine rare earth metals, part of a campaign to combat illegal mining and to consolidate its reserves, the China Daily newspaper reported on Wednesday.
* Australia's proposed new mining tax will not boost global prices of commodities, but will push investment overseas, Australian mine developer Clive Palmer said on Wednesday.
TECHNICALS
* Copper support at $6 660, resistance at $7 043, 14-day RSI at 39.1.
* Aluminium support at $1 977, resistance at $2 098, 14-day RSI at 36.1.
* LME copper touched its downside goal of $6 707 a tonne on Wednesday, bringing a new bearish target of $6 464 into play, based on its strong falling momentum.
* LME aluminium is expected to drop to $1 920 per tonne, as a bearish triangle has been breached at the lower side at $2 020. - Reuters
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