Copper pared gains in the European afternoon and other metals deepened losses as the dollar index strengthened after the European Central Bank eased its pace of rate hikes. A firmer dollar makes commodities priced in the U.S. currency more expensive for buyers using other currencies. Copper has slumped 10% since touching a seven-month peak in January, weighed down by lacklustre demand in China and worries about the health of the global economy. The U.S. Federal Reserve opened the door to a pause in its aggressive tightening cycle on Wednesday after hiking interest rates by a quarter of a percentage point. "Commodities have taken some cheer from those Fed comments, but it all seems rather muted," said independent consultant Robin Bhar. "There are still a lot of worries out there: when is recession coming, how deep and how long, and the China story seems to be disappointing and fading over time." China's factory activity unexpectedly contracted in April as orders fell and poor domestic demand dragged on the sprawling manufacturing sector, which uses a vast amount of metals.
Citi analysts said they were bearish on copper and downgraded their 0-3-month LME price forecast to $8,000 a tonne, from $8,500 a tonne previously.
Nickel went into the red after earlier outperforming, supported by tight inventories. It slid 2.8% to $24,040 a tonne, after touching an intraday high of $25,220. Nickel stocks in SHFE warehouses fell to a record low of 1,426 tonnes on Friday, while LME levels dropped to 39,630 tonnes, the weakest in 15-1/2 years, data showed on Thursday. LME aluminium eased 1.1% to $2,295.50 a tonne after earlier touching a six-week low, zinc dipped 0.1% to $2,627, lead dropped 1.3% to $2,104 and tin tumbled 3.9% to $25,730. For the top stories in metals and other news, click or ($1 = 6.9140 yuan) (Reporting by Eric Onstad Additional reporting by Mai Nguyen in Hanoi;Editing by Sohini Goswami, Shilpi Majumdar and Krishna Chandra Eluri)
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