Copper Drops for Third Week on Korea Jitters, China Policy
Source: Bloomberg (11/26/10)
"North Korea said 'escalated confrontation' will lead to war."
The metal for three-month delivery dropped as much as 2.2% to $8,161 a metric ton on the London Metal Exchange, and traded at $8,179.25 at 2:25 p.m. in Shanghai. The contract has fallen 2.7% this week. Three-month zinc declined 4.1% to $2,104.75 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 U.S. currency more expensive for holders of other currencies.
The dollar hit a seven-week high against the yen, and gained versus 15 of its 16 major counterparts today on concerns the conflict between North and South Korea could worsen, raising the demand for relatively safe assets. The Dollar Index, which tracks the greenback against the currencies of six major U.S. trading partners, climbed 0.3% to 79.960.
North Korea today said it's "ready to give a shower of dreadful fire and blow up the bulwark of the enemies," according to a Korean Central News Agency statement. "Escalated confrontation would lead to a war."
The Shanghai Futures Exchange, where the world's top three metals contracts are traded, said yesterday it will increase margins and daily price-move limits in the latest move by China to curb speculation and cool inflation.