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London base metals slide on economic concerns, hawkish Fed views

Prices of base metals in London trended downwards on Wednesday, as looming economic concerns on weak factory data and signs of more interest rates hikes from U.S. Federal Reserve weighed on market sentiment.

Three-month copper on the London Metal Exchange CMCU3 declined 0.4% to $7,772 a tonne, as of 0441 GMT.

Hopes of slowing interest rate hike and China’s stimulus have supported a recent rally in copper. The metal is often used as an economic indicator thanks to its wide application in a variety of industry sectors.

But bearish sentiment re-emerged following lower-than-expected factory data across the United States, Europe and Asia that worsened recession fears.

Denting the mood further, San Francisco Fed’s Daly said the central bank’s work of bringing down inflation is “nowhere near” almost done and there is still “a long way to go” to lower inflation from four-decade highs.

“Fed’s upcoming interest rate decisions remain the biggest uncertainty in the market given the likely steady growth path in China,” said Zhao Yi, a metals analyst at COFCO futures. “Any signs of its stance switching from dovish to hawkish could easily impact market sentiment.”

The market was also clouded by risk-off sentiment amid escaltating U.S.-China tensions after House Speaker Nancy Pelosi arrived in Taiwan late on Tuesday.

The highly controversial visit of Chinese-claimed self-ruled island sparked backlash from Beijing.

China on Wednesday also announced fresh bans of some agricultural product imports from Taiwan, following its suspension of imports from 35 Taiwanese food exporters earlier this week in a warning ahead of Pelosi’s visit.

The most-traded September copper contract on the Shanghai Futures Exchange SCFcv1 lost 0.3% to 59,850 yuan ($8,865.22) a tonne.

LME tin CMSN3 shed 0.2% to $24,205 a tonne, lead CMPB3 edged down 0.3% to $2,043 a tonne, zinc CMZN3 eased 0.5% to $3,297 a tonne, and aluminium CMAL3 dipped 0.1% to $2,412 a tonne.

ShFE nickel SNIcv1 decreased 2.2% to 173,640 yuan a tonne, tin SSNcv1 dropped 2% to 192,200 yuan a tonne, and zinc SZNcv1 declined 1% to 23,695 yuan a tonne, while aluminium SAFcv1 gained 0.6% to 18,195 yuan a tonne.
Source: Reuters (Reporting by Siyi Liu and Emily Chow; editing by Uttaresh.V)

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