Copper took a big hit on Tuesday, losing 3.2 percent on the COMEX as Eurozone fears gained momentum. All of the six main metals traded on the LME fell, led by nickel. Copper for delivery in three months lost 2.5 percent to $6,735 a metric tonne on the London Metal Exchange.

The ongoing crisis in the Eurozone sent the financial markets across the world on a downward flight.  The crisis, which seems to be deepening by the day, was heightened on Tuesday as the bank of Spain announced it had stepped up efforts to shut-down crumbling banks.  Last week, risk adverse investors were spooked by Germany's ban on short selling government bonds.

Fears around the globe over Europe's economy put hall selling pressure on the financial markets. The MSCI World Index of equities dropped for an eighth day in nine. The collapsing euro boosted the greenback; out pricing international investors from the US dollar based commodities such as copper. European stocks hit an eight week low as fears over international relations spread through the markets.  Last week, North Korean leader Kim Jong Il ordered his military to prepare for combat, after an international report blamed North Korea for sinking a South Korean warship.

Analysts claim that copper collapse is a matter of sentiment, and not fundamentals. Consumption is still strong, driven by continued economic growth, said Sheng Weimin of Wanxiang Resources Co. Usage, including refined and scrap copper, may climb to 8.96 million tonnes, said Sheng, who's studied metals markets for more than 15 years. Inventories of copper tracked by the LME shrank for a sixth day today to 479,325 tonnes, headed for a third monthly drop in a row. Inventories, including those monitored by Shanghai and New York, totaled 738,959 tonnes, the lowest since February. Bookings to remove metal from LME-monitored warehouses jumped 16 percent to 26,025 tonnes.

Company News

An International Court has ruled in favour of First Quantum Minerals (TSX: FM) in restarting negotiations over a cancelled mining deal. First Quantum's $553 million Kinganyambo Musonoi Tailings Sarl project was shuttered in August after a two and a half year review of the Central African nation's mining contracts by the government. The Vancouver-based company on Feb. 1 filed suit at the International Chamber of Commerce's International Court of Arbitration in Paris to dispute the decision. The mines minister of Katanga province commented on the ruling, stating that The impasse has stalled real investment in Katanga, where most of Congo's cobalt and copper deposits are located. The minister, Juvenal Kitungwa Lugoma said that the mine is an important investment in terms of employment, in terms of taxes and it's good for the state and the province in particular. There are problems with the contract, but they should restart negotiations, he added. Congo holds 4 percent of global copper reserves and is among the world's largest producers of cobalt.  The world's largest public traded copper miner, Freeport McMoRan Copper & Gold Inc. (NYSE: FCX) is also in negotiations with the government over the Tenke Fungurume Mining Sarl copper and cobalt project.

Japan's fourth-largest copper smelter, Dowa Metals & Mining Co. Plans to double the ore procurement rate from its mines to 30 percent in five years to make the company competitive against rivals in China and India.To survive as a smelter in current conditions, it's important to invest in mines, Nobuo Yamazaki, the unit's president, said in an interview in Kyoto yesterday. This will secure stable supplies as well as business returns. The company is looking for opportunities in small and medium-sized projects to reach the 30 percent target. The company just announced this past March that it would spend $183 million to buy a 25 percent stake in the Gibraltar copper mine in British Columbia from Taseko Mines Ltd. With the start of shipments from Gibraltar, the company plans to raise the procurement rate to 1 percent this year, Yamazaki said.

With help from Assistant Editor Vivien Diniz