Copper fell on Thursday after data showed Asia and Europe's factories stalled, deflating the market exuberance that followed a surprise intervention a day earlier by global central banks to inject liquidity into the stressed financial system.
Slumping export demand stalled manufacturing in some of Asia's biggest economies, and in the euro zone the sector contracted at its fastest pace in two years last month, data and surveys showed.
Benchmark three-month copper on the London Metal Exchange lost 1 percent to $7,805 per tonne, from $7,885 at the close on Wednesday, when it hit a four-week high and trade volumes shot up to almost double the 50-day moving average, amplified by short covering.
Copper, used widely in manufacturing, particularly in China, bucked the generally positive trend of stock markets, which still basked in the major central banks' move to ease a global liquidity crunch.
China's official purchasing managers' index for November fell to 49, dipping below the 50 mark that separates growth from contraction for the first time in nearly three years.
The weaker-than-expected China PMI reading came one day after Beijing lowered banks' reserve requirements by 50 basis points to try to ease credit strains.
“That move came earlier, and was more substantive than we had anticipated,” said Duncan Hobbs, senior commodities and mining analyst at Macquarie.
CLARITY
Key for the near-term economic outlook will be whether European leaders are able to agree on credible action to tackle the debt crisis at a European Union summit on December 9.
“Until we get greater clarity, markets will continue to trade in much the way we have seen recently, which is indiscriminately of the individual market fundamentals and taking their cues from economic data and political news flow,” Hobbs said.
In another negative for copper, workers at Chile's giant Collahuasi mine ended a two-day labour stoppage that disrupted output, the operator and union of the world's No. 3 copper mine said on Wednesday.
Three-month tin was the among the biggest losers of the base metals, with more Indonesian smelters shipping metal and breaking the industry's self-imposed ban on exports from the world's top exporter.
The metal fell 1.91 percent to $20,500 per tonne from $20,900 at the close on Wednesday.
Smelters in Indonesia's main tin producing region of Bangka island stopped shipments from October 1 in an effort to push benchmark tin prices above $23,000 a tonne, although PT Koba Tin sent a shipment to Singapore last week.
“The ITA's tin export moratorium is now looking increasingly fragile and a normalization of the Indonesian export flow before the year end is becoming more likely,” Credit Suisse said in a note.
Headline inventories of the metal in LME-monitored warehouses at 12,150 tonnes are the lowest in 13 months and have shrunk by around half since August. Lower inventories are partly an indication of demand for a metal.
Three-month lead was off just 0.9 percent at $2,090.
Inventories of lead in LME-monitored warehouses fell 575 tonnes to 369,250 tonnes as cancelled warrants, or new orders, jumped to nearly 6,000 tonneS into Singapore and 7,000 in Johor.
Aluminium was down 0.4 percent at $2,101 per tonne from a $2,110 close, nickel was down 2.4 percent at $17,070, and zinc fell 1.6 percent at $2,038. - Reuters