METALS-Metals fall on euro zone worries, firm dollar

* Copper, lead and nickel plumb to one-week lows

* Euro zone debt issues fan recovery concerns

* Fears Chinese economy may be overheating

(Recasts, updates with New York closing copper price, adds New York
dateline/byline and analyst comments)

By Chris Kelly and Michael Taylor

NEW YORK/LONDON, May 14 (BestGrowthStock) – Industrial metals fell under the weight
of a strong dollar on Friday, while ongoing concerns about sovereign debt in
Europe and possible fiscal tightening in China underscored the fragility of the
global recovery.

Copper for July delivery (HGN0: ) on the New York Mercantile Exchange’s COMEX
division slumped 9.75 cents, or 3 percent, to settle at $3.1340 per lb, after
dealing in a range from $3.2280 to $3.1170, its lowest level since May 7.

On the London Metal Exchange, benchmark copper for three-month delivery
(CMCU3: ) sank to $6,879 a tonne, its lowest since May 7, before closing at
$6,925 a tonne, from $7,160 on Thursday. Nickel and lead have also hit one-week
lows.

“It’s a risk sell-off,” Daniel Major, an analyst at RBS, said. “The
stronger dollar is not helping the commodity complex, apart from gold.”

The euro lost more ground versus the U.S. dollar to trade below $1.24 on
Friday, after European Central Bank policymaker Axel Weber said dangers still
lurk in the financial system and should not be underestimated. For more, see
[ID:nLAG006286] [FRX/]

Despite a $1 trillion rescue package announced earlier this week to prevent
a Greek debt crisis from spreading to other euro zone states, investors
continued to side with caution, questioning the impact on future growth and
metals demand.

“We are not out of the woods yet,” said Wayne Atwell, managing director of
New York-based investment bank Casimir Capital LP. “You’re going to see a lot
more headlines about the EU, and how they are going to resolve their
longer-term problems.

“The recovery is fragile and that has got to put pressure on demand,” he
said.

The debt contagion fears overrode strong macroeconomic data from the United
States, one of the top metals consumers, which showed both a jump in retail
sales and a continuing expansion of industrial activity. [ID:nN14138390]

Furthermore, investors were keeping a firm eye on China, the world’s number
one metals consumer, after rising inflation data this week fanned speculation
that Beijing will try to curb inflation and cool its economy. [ID:nTOE64A01U]

“There are fears that the introduction of further restrictive monetary
measures in China might be imminent … under normal circumstances, therefore,
no major upwards jumps in prices of base metals should be expected,”
Commerzbank said in a note.

STOCKS OFFER DEMAND HOPE

Helping cap losses however, were falls across the complex in LME
inventories — a possible signal of improving demand.

Copper stocks fell 1,075 tonnes to total 484,075 tonnes while canceled
warrants – material set to leave warehouses – were at 18,450 tonnes from 15,550
on May 10.

Canceled warrants in zinc were at 24,100 tonnes, up from 6,050 tonnes on
May 4, but despite a 1,050 tonnes withdrawal on Friday, they remain near their
highest level since August 2005.
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http://graphics.thomsonreuters.com/10/GLB_MTLSTK.html
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Zinc (CMZN3: ) closed at $2,055 a tonne from $2,160, while
aluminum (CMAL3: ) fell $69 to $2,101. LME stocks of aluminum, used in transport
and packaging, fell 3,725 tonnes to remain near record levels at 4.47 million
tonnes.

Russia’s United Company RUSAL (0486.HK: ) (RUAL.PA: ), the
world’s top aluminum producer, said on Friday it expected
aluminum prices to remain above $2,000 per tonne for the rest
of the year. [ID:nHKU002317]

Steel making ingredient nickel (CMNI3: ) sank more than 5
percent to a one-week low of $21,500 a tonne, before ending down $1,295 at
$21,555. Tin (CMSN3: ) shed $250 to end at $17,550, while battery material lead
(CMPB3: ) slumped to a one-week low at $1,923 a tonne, before ending down $120 at
$1,940.

Metal Prices at 1840 GMT
Metal Last Change Pct Move End 2009 Ytd Pct

move
COMEX Cu 311.10 -10.85 -3.37 334.65 -7.04
LME Alum 2080.00 -90.00 -4.15 2230.00 -6.73
LME Cu 6875.00 -285.00 -3.98 7375.00 -6.78
LME Lead 1920.00 -140.00 -6.80 2432.00 -21.05
LME Nickel 21525.00 -1325.00 -5.80 18525.00 16.19
LME Tin 17390.00 -410.00 -2.30 16950.00 2.60
LME Zinc 2035.00 -125.00 -5.79 2560.00 -20.51
SHFE Alu 15650.00 -40.00 -0.25 17160.00 -8.80
SHFE Cu* 56350.00 -310.00 -0.55 59900.00 -5.93
SHFE Zin 16805.00 -125.00 -0.74 21195.00 -20.71
** 1st contract month for COMEX copper * 3rd contract month for SHFE AL, CU and
ZN SHFE ZN began trading on 26/3/07

Stock Basics

(Additional reporting by Humeyra Pamuk in London; editing by William Hardy
and Rebekah Kebede) (([email protected]; +44 207 542 0919; Reuters
messaging: [email protected]))

METALS-Metals fall on euro zone worries, firm dollar