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SHFE metals sink on raft of bad news

By Michael Bellart  (Global Times)

07:10, May 31, 2012

Domestic metals futures fell Wednesday in a mostly down day for commodities as China curbed expectations for large-scale stimulus.

The most traded copper contract on the Shanghai Futures Exchange (SHFE) slipped 0.23 percent to close at 55,320 yuan ($8,706.65) per ton. The SHFE September contract opened 0.86 percent below Tuesday's closing price and drifted lower over the session.

The contract fell Wednesday after the Xinhua News Agency reported that China will not roll out a stimulus plan anywhere near the scale of the 4 trillion yuan infrastructure binge it undertook following the financial crisis of 2008, analysts said.

Overnight, the three-month LME copper contract fell 0.5 percent. The contract slipped on news that Egan-Jones Ratings cut Spain's credit level due to the recent trouble in its banking system, Reuters reported Wednesday. The news caused the euro to fall to its lowest level against the US dollar in almost two years.

The boosted dollar also pushed down commodities prices. The US Dollar Index, which gauges the dollar against a basket of currencies, rose 0.45 percent in the 24 hours preceding the market's close.

LME copper was trading at $7,597.20 per ton when the SHFE session ended Wednesday, down 0.79 percent on the day.

In other SHFE metals, December gold fell 1.73 percent to 319.86 yuan per gram.

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