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Copper Prices Continue to Slump on China Outlook

“Copper traders extended a bearish streak into a second week on mounting concern that demand is weakening after manufacturing contracted from China to Europe.

Twelve of 29 analysts surveyed by Bloomberg expect the metal to decline next week and seven were neutral. Inventories at bonded warehouses in Shanghai more than doubled since the fourth quarter, a survey of seven traders and analysts showed. Separate stockpiles monitored by the Shanghai Futures Exchange are near the highest in at least nine years, bourse data show. China consumes 40 percent of the world’s copper.

Factory output in Germany and France unexpectedly shrank in March, adding to signs Europe is sliding into recession, and a measure of China’s manufacturing fell to the weakest since November, reports showed yesterday. Chinese Premier Wen Jiabao cut the country’s annual growth target to 7.5 percent earlier this month, the lowest since 2004. Europe accounts for about 18 percent of global copper demand, Barclays Capital data show.

“A slowdown in Europe and China is not good for the long- term outlook,” said Jeffrey Sherman, who helps manage about $30 billion of assets for DoubleLine Capital in Los Angeles. “It feels that we could repeat 2011, where we had a good first half and then there was a correction.”

Copper rose 10 percent to $8,379 a ton this year on the London Metal Exchange. Prices were little changed through most of the first six months of 2011 and then plunged 26 percent in the third quarter. The Standard & Poor’s GSCI gauge of 24 commodities climbed 8.5 percent this year and the MSCI All- Country WorldIndex (MXWD) of equities advanced 11 percent. Treasuries lost 1.6 percent, a Bank of America Corp. index (MXWD) shows….”

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