FT: Chinese tightening fears weaken commodities
By Jack Farchy
Published: May 11 2010 11:22 | Last updated: May 11 2010 11:22
Oil and metals slid on Tuesday as Monday’s optimism waned in the face of fears of Chinese monetary policy tightening.
Data released on Tuesday showed Chinese consumer price inflation at 2.8 per cent in April – its highest for 18 months, but below Beijing’s full-year target of 3 per cent.
Analysts believe that if the rate of CPI inflation moves above 3 per cent, more aggressive monetary policy measures, such as raising the benchmark lending and deposit rates, are likely.
The fear of Chinese policy tightening has dogged commodities markets in recent weeks, with base metals well off their mid-April peaks.
On Tuesday copper for delivery in three months fell 2.1 per cent to $6,970 a tonne on the London Metal Exchange. Aluminium was off 2.9 per cent at $2,075 a tonne, while lead – particularly exposed to moves in Chinese demand as it is used in car and electric bike batteries – dropped 3.7 per cent to $2,022 a tonne.
In oil, Nymex June West Texas intermediate dropped $1.16 to $75.64 a barrel and ICE June Brent fell $1.07 to $79.05.
Meanwhile, gold regained some ground as the euphoria created by the eurozone rescue plan began to fade. Spot gold was 0.6 per cent higher at $1,208.95 a troy ounce.
.Copyright The Financial Times Limited 2010. You may share using our article tools. Please don't cut articles from FT.com and redistribute by email or post to the web.
_______________________________________________________
If you take anything I say as advice, you're crazier than I am.
