Feb. 21 (Bloomberg) -- Copper, tin and nickel fell to the lowest this year on signs of a deepening slump in Europe and concern that the Federal Reserve will slow the pace of economic stimulus in the U.S.
A composite index of services and manufacturing in the euro currency bloc fell to 47.3, compared with 48.6 in January and a median forecast of 49 in a Bloomberg survey of economists, a report today from Markit Economics showed. A reading below 50 means contraction. Several Fed policy makers said the central bank should be ready to vary the pace of its $85 billion in monthly bond purchases, minutes of a meeting showed yesterday.
“The Fed minutes spooked people with the idea that policy makers aren’t going to prop up the markets much longer, and we have bad news out of Europe again,” Michael Smith, the president of T&K Futures & Options in Port St. Lucie, Florida, said in a telephone interview. “It’s all bearish for metals in the near term.”
Copper futures for May delivery slumped 1.5 percent to settle at $3.5695 a pound at 1:22 p.m. on the Comex in New York after touching $3.5535, the lowest since Dec. 24.
Copper also fell on a jump in stockpiles and a stronger dollar, which makes commodities less appealing as an alternative investment. Inventories monitored by the London Metal Exchange, up 31 percent this year, rose 1.8 percent to 420,250 metric tons, bourse figures showed.
On the LME, copper for delivery in three months fell 1.2 percent to $7,861 a ton ($3.57 a pound). Prices touched $7,813.50, dropping below the 200-day moving average of $7,831.
Nickel slumped as low as $16,600, the cheapest since Nov. 27 and below the 200-day moving average of about $16,917. Tin touched $22,980, the lowest since Dec. 20.
Lead, zinc and aluminum also retreated in London.
--With assistance from Agnieszka Troszkiewicz in London. Editors: Thomas Galatola, Millie Munshi