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Fed, PMI dent metal prices

By Michael Bellart (Global Times)

08:06, June 25, 2012

Domestic base metal futures are set to fall today after prices tumbled late Thursday due to weak economic data from China and the lack of additional stimulus from the US central bank.

Although the benchmark copper futures on the London Metal Exchange (LME) held steady Friday, Chinese futures will be playing catch up to Thursday's drop because domestic markets were closed Friday for the Dragon Boat Festival holiday.

The three-month LME copper contract added 0.1 percent Friday to close the week at $7,338 per ton. The contract fell 2.9 percent last week.

Copper futures tumbled Thursday after the US Federal Reserve decided to only extend its current bond buying program, known as Operation Twist, as opposed to launching a new round of stimulus measures that some on the market had hoped would bolster demand for metals.

Copper's fall was part of a broader commodities sell-off that occurred late Thursday due to weaker economic data from the world's largest economies, including a drop in HSBC Holdings and Markit Economics' Flash PMI for June. The preliminary indicator, which focuses on small and medium-sized Chinese firms, fell to 48.1 this month, down from 48.4 in May.

On the domestic front, copper stockpiles tracked by the Shanghai Futures Exchange (SHFE) rose 5.3 percent last week to 137,084 tons, reversing the trend of declines over the last few weeks, according to the data released by the exchange Thursday.

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