(Recasts with updated prices, adds U.S. data)
By Eric Onstad
LONDON, March 10 (Reuters) - Aluminium prices hit a
two-month low on Friday, pressured by disquiet about the impact
of higher interest rates on economic growth and metals demand.
Three-month aluminium on the London Metal Exchange slipped 0.5% to $2,315 a tonne by 1805 GMT after touching the
weakest since Jan. 6.
"Higher rates expectations are consistent with a more
downbeat and cloudy view of metals demand, so it's no surprise
that prices have come down," Edward Gardner, commodities
economist at Capital Economics, said.
Metals prices pared losses after data showed the U.S.
economy added jobs at a brisk clip in February, prompting
financial markets to reduce expectations that the Federal
Reserve would raise interest rates by half a percentage point
this month.
The dollar index weakened after the data, making
commodities priced in the U.S. currency less expensive for
buyers using other currencies. U.S. Fed Chair Jerome Powell said this week the central bank
may need to hike interest rates higher than expected, fuelling
worries among investors it may move too aggressively.
Uncertainty over demand in top metals consumer China after
its recent party congress also weighed on prices.
"We saw out of that continued policy support for the
property sector, but overall it disappointed some expectations
of greater support from the government with the absence of a
major stimulus package," Gardner said.
Healthier supply also pressured the market.
China, the world's top refined copper producer, smelted
907,800 tonnes of copper in February, up 6.5% on-year and
slightly higher than the expected 900,000 tonnes, according to
Shanghai Metals Market, which anticipated March output would
reach 949,500 tonnes.
Demand in China, however, was picking up, reflected by a
decline in stocks, participants said.
Copper stocks in SHFE warehouses ticked down for a second
consecutive week to 214,972 tonnes on Friday, 10.8% less
compared with last Friday.
LME copper was little changed at $8,854 a tonne,
while zinc dropped 1.5% to $2,930 after touching the
weakest since Nov. 28.
Nickel eased 2.5% to $22,700, lead dipped
0.7% to $2,070 and tin dropped by 2.6% to $22,740.
For the top stories in metals, click (Reporting by Eric Onstad; Additional reporting by Siyi Liu and
Dominique Patton in Beijing; Editing by Shounak Dasgupta and
Barbara Lewis)
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