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METALS-Copper hobbled by stumbling stocks on Goldman news

April 16, 2010 (Reuters)

"Copper fell more than 2 percent on Friday, with risk aversion coming to the fore as stockmarkets slid after the U.S. Securities and Exchange Commission charged Goldman Sachs with fraud.

"Other base metals were knocked down, with lead falling nearly 5 percent to hit its lowest since April 6 at $2,225.25.

"Benchmark copper for three-month delivery on the London Metal Exchange ended at $7,763 a tonne from $7,945 at the close on Thursday. The metal, used in power and construction, hit a 20-month high at $8,043.75 on Monday.

""The sell-off in stocks has rattled commodities, due to Goldman Sachs being charged for fraud," said Robin Bhar, an analyst at Credit Agricole.

""The commodity markets have been closely correlated to rising stock markets, so any derailment of thattrend was going to be slightly negative for commodities." Goldman's stock fell 15.6 percent to a session low at $155.57 the U.S. Securities and Exchange Commission alleged fraud in the bank's structuring and marketing of a debt product tied to subprime mortgages, which cost investors more than $1 billion. [.N] [ID:nN16121493].

"Also weighing on metals was news that China will gradually adopt a floating exchange-rate system for its yuan currency, according to a Dow Jones Newswires report that cited a speech by President Hu Jintao. [ID:nWNA8510]

""It was always thought China would allow the yuan to slowly rise against the dollar, and now they're saying it's going to be a floating exchange rate. It injects more uncertainty. The two things markets hate are uncertainty and uncertainty," said Bhar.

"If the world's top copper consumer raises the value of the yuan against the dollar, it would make dollar-priced commodity imports cheaper for the world's biggest raw materials consumer, but it would also make Chineseexports less competitive.

"Chinese monetary policy concerns were also revived after data on Thursday showed economic growth quickened in the first quarter to 11.9 percent, the fastest pace since 2007. [ID:nTOE63D091]

""Chinese GDP was impressive but people are concerned there's going to be monetary tightening which could impact demand. But the general trend is up, I think second-quarter prices should stay strong," said Carl Firman, analyst at VM Group.

"Luvata, one of the world's largest copper fabricators, said on Friday that copper prices around the $8,000 a tonne mark were unjustified, even though it is seeing improved demand for its products this year. [ID:nLDE6371E2]

"STOCK FALLS

"Aluminium ended at $2,435 a tonne versus $2,483 but earlier hit $2,494, its highest since September 2008. LME stocks for the metal, used in transport and packaging, rose 3,150 tonnes to remain near record highs at 4.56 million tonnes.

"For a graphic on aluminium stocks, click: http://graphics.thomsonreuters.com/10/04/GLB_MTLSTK.html

"Steel making ingredient nickel ended at $26,705 from $27,225, having earlier hit $27,544, levels not seen since May 2008.

"Nickel inventories fell 636 tonnes to 151,242 tonnes, down from record levels at 166,476 in early February.

"Speculators have been active in the nickel market in recent weeks, with LME data showing a dominant position controlling between 50-80 percent of cash warrants. [LME/WC]

"For a the latest column on nickel, click [ID:nLDE63C19H]

"Zinc ended at $2,423 a tonne from $2,509 but earlier hit a three-month high at $2,550 as analysts cited short-covering, while lead ended at $2,261 from $2,340, having traded at a three month high at $2,400 and then down to a more than one week low of $2,225.25.

"Soldering metal tin ended at $19,200 from $18,970 but touched a peak not seen since September 2008 at $19,300.

"Metal Prices at 1609 GMT Metal Last Change Pct Move End 2009 Ytd Pctmove #VALUE! LME Alum 2430.00 -53.00 -2.13 2230.00 8.97 LME Cu 7750.00 -195.00 -2.45 7375.00 5.08 LME Lead 2245.00 -95.00 -4.06 2432.00 -7.69 LME Nickel 26600.00 -625.00 -2.30 18525.00 43.59 LME Tin 18950.00 340.00 +1.83 16950.00 11.80 LME Zinc 2410.00 -99.00 -3.95 2560.00 -5.86 SHFE Alu 17030.00 -60.00 -0.35 17160.00 -0.76 SHFE Cu* 62350.00 -240.00 -0.38 59900.00 4.09 SHFE Zin 19615.00 150.00 +0.77 21195.00 -7.45 ** 1st contract month for COMEX copper * 3rd contract month for SHFE AL, CU and ZN SHFE ZN began trading on 26/3/07

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