Wed Jun 27, 2012 3:36am EDT
* Shanghai slightly up, off two-week low * ShFE aluminium at lowest in more than 3 years * Limited stocking in China supports copper * Coming Up: U.S. durable goods orders; 1230 GMT (Updates prices) By Carrie Ho SHANGHAI, June 27 (Reuters) - London copper dropped on Wednesday, snapping two straight days of gains, as investors shied away from riskier assets on growing conviction that a European summit this week will fail to resolve the region's intractable debt crisis. But expectations that top copper buyer China could be lured by low prices and start restocking could help check losses. Three-month copper on the London Metal Exchange fell 0.2 percent to $7,344.50 a tonne by 0717 GMT. LME copper has shed about 16 percent from a peak of $8,765 struck in February. "Investors are playing it safe ahead of the EU summit in case any more bad news comes out of the euro zone, which is the focus of market anxiety now," Great Wall Futures analyst Li Rong said. Hopes of the EU summit yielding any solution to the euro zone debt crisis evaporated after German Chancellor Angela Merkel flatly rejected the idea of common euro zone bonds, even though European Council President Herman Van Rompuy on Tuesday had called for one. The most-active Shanghai October copper contract rose 0.2 percent to 53,740 yuan ($8,400) a tonne, reversing earlier losses, on limited restocking by Chinese consumers at recent low prices. Shanghai copper hit a low of 53,420 yuan a tonne earlier in the session, its lowest since June 12. "Shanghai base metals are under pressure today as their prices have not fallen as much as their London counterparts over the past few weeks. Yesterday's steep decline in Shanghai aluminium prices drew all the bears out," Li added. Shanghai aluminium fell to its lowest in more than three years of 14,925 yuan per tonne, after a steep drop in the previous session on news China's top aluminium producing province was giving some smelters a discount in their electricity bill, fuelling fears this would worsen China's aluminium overcapacity problem. "Investors who were holding a lot of aluminium stocks have been dumping those along with other base metals positions," said a Shanghai-based trader with an international firm. "While things look bad for aluminium, there isn't a particular reason for selling the other metals. I think these investors have been feeling bearish for a while now and the subsidy news gave them an excuse to do so," he added. Base metals prices at 0717 GMT Metal Last Change Pct Move YTD pct chg LME Cu 7344.50 -14.50 -0.20 -3.36 SHFE CU FUT OCT2 53740 120 +0.22 -3.40 LME Alum 1845.00 0.00 +0.00 -8.66 SHFE AL FUT OCT2 15060 -05 -0.03 -4.92 HG COPPER JUL2 331.15 -0.15 -0.05 -3.62 LME Zinc 1773.25 -2.75 -0.15 -3.89 SHFE ZN FUT OCT2 14245 -70 -0.49 -3.72 LME Nickel 16260.00 -15.00 -0.09 -13.09 LME Lead 1772.75 4.75 +0.27 -12.89 SHFE PB FUT 14390 -90 -0.62 -5.89 LME Tin 18600.00 40.00 +0.22 -3.13 LME/Shanghai arb 705 Shanghai and COMEX contracts show most active months ^ LME 3-m copper in yuan, including 17 pct VAT, minus SHFE third month ($1 = 6.3629 Chinese yuan) (Editing by Himani Sarkar)
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