Copper was down on Thursday, surrendering gains earlier in the day, as the dollar strengthened and investors remained cautious ahead of a debt auction in France that will give more clues on the state of the euro zone credit situation.
Benchmark copper on the London Metal Exchange fell 0.13 percent to $7,528 a tonne by 11:47 SA time from a close of $7,540 a tonne on Wednesday.
The euro hit a 15-month low against the dollar and an 11-year low versus the yen as concerns about the deepening euro zone debt crisis ran high before a French debt auction later on Thursday.
The crisis has crippled economic growth prospects and has weakened the outlook for industrial metals demand.
This, coupled with an economic slowdown in the world's second-largest economy, China, pushed copper prices 21 percent lower in 2011. China, the largest market for industrial metals, accounts for about 40 percent of global refined copper supply.
“In base metals there is still higher risk aversion of market players, and metals are also suffering because of the stronger dollar,” said Commerzbank analyst Daniel Briesemann.
A stronger dollar makes commodities priced in the US currency costlier for holders of other units.
“We'll have to wait for next week to see what economic data will suggest, especially from China ... In November the Chinese have acted opportunistically, and with lower prices they imported more copper. In December prices were also low, so I expect we'll see some good import figures,” Briesemann said.
France plans to raise up to 8 billion euros in long-term debt on Thursday, and next week a key test for investor confidence will be debt sales by Spain and Italy.
ALUMINIUM SURPLUS
In other industrial metals, aluminium was at $2,053.25 a tonne, down from a last bid of $2,064 on Wednesday.
News that Rio Tinto Alcan has declared force majeure on aluminum output from two of its smelters in Canada due to separate operational and labor issues, failed to lift aluminium prices.
“Those two smelters are too small to have an impact on the aluminium market,” Briesemann said.
“Aluminium is in such an oversupply that a couple of smelters closing for a couple of weeks shouldn't be worrying.”
Bankrupt primary aluminium producer ZALCO, meanwhile, is in talks with eight potential buyers for a takeover of part or all of its plant in Zeeland, the Netherlands, the company's receiver said late on Wednesday.
Tin was at $19,499 from $19,605, while zinc, used to galvanise steel was at $1,857.50 from $1,869 at Wednesday's close.
Battery material lead was at $2,048 from $2,060, and nickel was at $18,545 from $18,800. - Reuters