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Copper hits 1-month low, aluminium at 7-week high

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18 October 2007 @ 01:01 pm EST
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LONDON - Copper touched a one-month low on Thursday, dragged down by poor U.S. data triggering technical selling while dwindling stocks sent aluminium to a seven-week high.

Mining shares such as BHP Billiton, Rio Tinto and Anglo American fell between half a percent and 2 percent, tracking Britain's FTSE index, which shed 1 percent.

Copper was under pressure as hefty rises in inventory levels weighed on prices and analysts said the metal broke below key support levels after the U.S. data triggered further selling.

London Metal Exchange copper for three months delivery fell to $7,814 a tonne, its lowest since September 19, before ending the day at $7,860, down $100 from Wednesday.

"I think one part of the U.S. economy that has held up reasonably well so far was the labour market, so higher jobless claims may have caused some concerns over growth," metals analyst Michael Widmer at Calyon said.

Investors fret over a possible slowdown in the U.S. economy, which could mean slower demand growth for industrial metals.

The number of U.S. workers filing new claims for jobless aid jumped by 28,000 last week, far more than anticipated and the biggest increase for any week since February.

The weekly claims figures are volatile but the latest numbers add to other signs of a slowing economic pace, including reduced starts on new homes. "We're holding around these levels but there's not enough fresh buying coming," an LME trader on the trading floor said. "Also stocks have risen, which is negative for copper." Stocks of copper, used extensively in construction and wiring, rose by 4,625 tonnes to 147,750 tonnes or some three days of global consumption. Inventories have risen by nearly 10 percent in a month.

The same data helped dollar fall to a record low against a basket of currencies but the market did not focus on weak dollar -- makes base metals cheaper for local currency holders.

"The weaker dollar is supportive to the base metal complex ... but further weakness is expected," another LME trader said.

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