Copper fell more than 1 percent on Friday, on course for a second weekly loss, as weak economic data from top consumer China and deepening euro zone political turmoil dented demand prospects for the metal.
After Thursday's data from China showed a slump in copper imports, the latest string of data on industrial output, investment and retails suggested that the world's second-largest economy was surprisingly vulnerable to a global slowdown and a credit crunch at home.
European shares fell after JPMorgan's trading losses from a failed hedging strategy, and the euro touched a three and a half month low versus the dollar as political deadlock keeps Greece without a government.
Three-month copper on the London Metal Exchange edged down 1 percent to $8,020.50 a tonne from $8,105 by 11:08 SA time. The red metal, used in power and construction, was on course for a two week loss of around 4 percent.
“It's risk off across all assets, global growth concerns have not gone away and they're going to remain the driver for metals in the short term,” said Barclays Capital analyst Gayle Berry.
But she added: “When you have a market in backwardation where inventories are low and have been falling it's difficult to aggressively short copper.”
Latest data showed LME copper stocks stood at 221,275 tonnes, not far off their lowest level in three and a half years. Shanghai's copper stockpiles fell 13 percent last week, though they remain elevated near a 10-year high of 227,276 tonnes hit in March.
The premium for cash copper over the three month price remained elevated at $102 a tonne, indicating tight nearby supply. The spread has eased though from $150 a tonne seen in April, but is a drastic contrast to an average $13 a tonne discount in 2011.
Stocks and spreads aside, near term prospects for copper remained dim given the shaky macro-economic backdrop, with better than forecast jobless data in the US on Thursday a rare bright spot.
Copper failed to gain much traction even after the euro erased losses against the dollar on Friday after Greek conservative leader Samaras raised cautious expectations a political deal to form a new Greek government may be reached soon.
Investors also looked to Spain, which was set to intensify the clean-up of its banks on Friday after difficult last-minute talks between the government and lenders on details of planned financial system reforms.
“The situation in Europe may continue to deteriorate, which will be the most bearish factor for industrial metals,” said Zhu of Nanhua Futures, adding that the US economy was not yet able to lead global growth or fend off the impact from the euro zone debt crisis.
Battery material lead fell 1.46 percent to $2,071 from $2,100.
Doe Run Co restored its primary lead smelter in Herculaneum, Missouri, this week to its full production capacity of 130,000 short tons a year and is on track to meet its production target for May, a company executive said on Thursday.
Soldering metal tin fell to $20,350 a tonne from $20,425, zinc dropped to $1,930.50 from $1,969, aluminium was down at $2,038 from $2,045.50, while stainless-steel ingredient nickel fell to $17,120 from $17,165. - Reuters