LME copper slips on Fed hike jitters; Shanghai nickel breaks record

Jan 21 (Reuters) – Copper prices in London fell on Friday as risk sentiment deteriorated, with markets expecting the U.S. Federal Reserve to hike interest rates aggressively this year, although hopes of renewed political support from China kept the metal on course for a weekly gain.

Dwindling inventories and optimism about the outlook for demand, however, pushed nickel higher, with Shanghai’s benchmark price hitting a record high for a second straight day.

Three-month copper on the London Metal Exchange was down 0.8% at $9,913.50 a tonne at 07:05 GMT after a two-day advance.

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An early rate hike by the US central bank could reduce liquidity in financial markets and slow the recovery of the world’s largest economy.

“A question for us is whether the Fed will signal the potential for a rate hike in March,” ANZ analysts said in a note, as market participants eagerly await the two-day policy meeting of the Federal Open Market Committee from Tuesday. Read more

But copper, often used as an indicator of global economic health, was on course for a weekly gain of more than 2%, having also been supported by supply issues, low inventories in exchange warehouses and a series of monetary easing measures in China’s top consumer. Read more

The most-traded copper contract in March on the Shanghai Futures Exchange ended the day up 0.6% at 71,290 yuan ($11,246.61) a tonne.

Shanghai nickel rose 5.2% to a record high of 179,780 yuan a ton.

London Nickel rose 0.3% to $23,860 a tonne, rebounding from early losses. It touched $24,435 in the previous session, its highest since August 2011.

“The market is bracing for strong demand for key commodities as the world decarbonizes, so higher risk premiums are likely for key commodities,” said ANZ analysts, including the nickel which is used in electric vehicle batteries.

LME aluminum fell 1% to $3,080 a tonne, lead edged up 0.7% to $2,365, zinc fell 0.4% to $3,634.50 and tin edged higher. fell 0.6% to $43,220.

Shanghai aluminum fell 0.3% to 21,430 yuan a tonne, zinc rose 0.3% to 25,215 yuan, lead lost 0.1% to 15,675 yuan and tin rose. gained 1.2% to 333,920 yuan.

($1 = 6.3388 yuan)

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Reporting by Eileen Soreng in Bengaluru; additional reporting by Enrico Dela Cruz in Manila; Editing by Sherry Jacob-Phillips and Subhranshu Sahu

Our standards: The Thomson Reuters Trust Principles.

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