Copper price hits one-year low under $8,000 an ounce
Copper prices tumbled to a one-year low under $8,000 an ounce on Thursday, extending their run lower since reaching record highs in February, as weaker Chinese manufacturing data added to global demand concerns.
On the London Metal Exchange, copper for delivery in three months struck $7,788 a tonne -- the lowest level since September 28, 2010.
Prices have slumped 23 percent since hitting a record-high $10,190 a tonne on February 15, when markets were extremely optimistic about economic recovery.
However in recent months the outlook for growth has turned extremely sour and was further dented on Thursday when data showed that manufacturing activity in commodities-hungry China contracted for a third month running in September.
The HSBC preliminary purchasing managers' index (PMI) fell to a two-month low of 49.4 in September from a final reading of 49.9 in August, the British banking giant said in a statement.
A reading above 50 indicates the sector is expanding, while a reading below 50 suggests contraction.
Copper prices were also hit on Thursday by a stronger dollar, which makes the dollar-denominated base metal more expensive for euro-holding buyers, denting demand.
The US currency rallied on Thursday as investors flocked to the safe-haven dollar after the US central bank warned of significant downside risks to the economy.
The US Federal Reserve on Wednesday unveiled a $400-billion stimulus plan to reduce long-term interest rates but investors chose to focus on its warning about the outlook for the world's biggest economy and oil consumer.
The Fed painted a grim picture of the economy, strapped with slow growth, high unemployment and a depressed housing market.
"On the back of the plentiful bearish news and the further rise of risk aversion, it is not surprising that metal prices have come under strong pressure," Commerzbank analyst Daniel Briesemann said on Thursday.
© 2011 AFP