* China central bank assurance fails to calm jitters
* Aluminium stocks hit another record on LME
* Lower price levels boosts buyers' hedging activity
By Harpreet Bhal and Silvia Antonioli
LONDON, June 26 (Reuters) - Copper slipped on Wednesday on
concerns about the outlook for demand from top consumer China as
moves by the country's central bank to ease fears of a credit
crunch failed to fully reassure investors.
Also hitting sentiment were growing expectations that
improving U.S. economic conditions could prompt the Federal
Reserve to rein in its stimulus programme, which has helped
Such concerns were only partially offset by comments from
Mario Draghi, president of the European Central Bank, who
reiterated on Wednesday that an ECB exit from its loose monetary
policy remains distant.
Benchmark copper on the London Metal Exchange closed
at $6,735 per tonne, one percent down from Tuesday's close of
Copper, used in power and construction, fell almost 4
percent last week, its biggest weekly drop since mid April, and
has already more than one percent this week.
"The potential scaling back of stimulus measures (by the
U.S. Fed) and discouraging signs out of China have been a drag
on metals prices across the board," said Ross Strachan,
economist at Capital Economics.
"Looking at fundamentals it would suggest that there is
further downside for copper. We expect prices to fall below
$6,000 a tonne next year due to additional mine supply and the
weak state of demand."
Demand from China accounts for around 40 percent of global
The People's Bank of China (PBOC) said late on Tuesday it
had provided cash to some institutions facing temporary
shortages and would continue to do so if needed.
Copper hit a three-year low early this week, pressured by
worries that China's central bank was engineering a tightening
of cash in a bid to rein in excessive credit growth.
That steep fall was mainly driven by financial investors
opening short positions but the lower prices are now attracting
more industrial buyers, according to Commerzbank.
"The price fall was exaggerated so some market players see
these lower price as a long-term buying opportunity. Hedging
activity has clearly increased in the last few days as these
lower prices are attractive," said Commerzbank analyst Daniel
"Below 7,000 we see a stronger increase in buying interest
so copper may still be able to rise quite markedly by the end of
In other metals, aluminium closed at $1,771 a tonne,
from Tuesday's finish of $1,784. Aluminium stocks in London
Metal Exchange warehouses hit a fresh record high of 5.448
million tonnes, data showed.
Zinc closed at $1,838 a tonne from $1,848.50, lead
at $2,031 from $2,055 and nickel at $13,605 from
$13,930. Tin ended at $19,700 from $19,875.