By Humeyra Pamuk
LONDON (Reuters) - Copper tumbled to a three-week low on Tuesday as fears of a looming U.S. recession continued to dampen sentiment, sparking a global market sell-off.
European stocks shed more than 1 percent, extending an almost 6 percent fall in the previous session while U.S. stock futures tumbled around 5 percent, pointing to a weak start on Wall Street.
Copper for three-months delivery on the London Metal Exchange fell to $6,675 per tonne, its lowest since December 31 and was at $6,800/6,810 per tonne by 1019 GMT, down $70 from Monday's close.
Many analysts say supply and demand dynamics for copper remain buoyant, with expectation of robust demand from China continuing and making up for possible losses from the U.S.
But poor sentiment dominating global markets outstripped fundamentals, at least for now.
"What seems to be paramount for market at the moment is the uncertain macro economic outlook," analyst Sudakshina Unnikrishnan at Barclays said adding that it combined with weakness in the equity markets and dragged markets lower.
Up until Monday, base metals had been relatively immune to falls in equity markets, hitting two-month highs in the first week or two of the year on new investment pouring into metals, amid commodity indices rebalancing.
Copper is down over 10 percent from those peaks but remains half a percent higher than the end of last year.
"Metals prices are likely to fall further today following yesterday's equity market losses," analyst John Meyer at Fairfax said.
FUNDAMENTALS?
Some analysts believe fundamentals for copper remain strong, expecting Chinese buying to return after the Chinese New Year as the country remains a net importer and the biggest consumer of the metal.
"The fundamentals did not change. Chinese customs data was quite positive," Unnikrishnan said.
China's refined copper imports rose 16.5 percent on the year to 111,685 tonnes in December and 1.49 million tonnes in 2007, up 80.6 percent, customs data showed.
"Metals could break away from financial markets from time to time but in the end whatever direction financial markets are going we will probably follow," an LME trader said.
Among mining shares, London-listed Anglo American and Rio Tinto were down around 1 percent, dragged down by weaker metal prices and broader equity market weakness.
While Xstrata, which announced that it was in talks with the Brazilian mining giant Vale, was also down around 1 percent after falling more than 5 percent in the previous session.
Among other base metals, nickel was the worst performer. Three-months nickel, a key ingredient of stainless steel making, was down $1,050 at $26,650.
"Nickel is trapped in a consolidation area. Support is at $25,500. Resistance is at $30,000. There is a bullish bias with a rebound from the short-term uptrend line," technical analyst Daryl Guppy of Guppytraders.com said.
Three-months zinc lost $30 to $2,200/2,210 per tonne while aluminium was at $2,400/2,405 from $2,410 and lead was $45 lower at $2,460/2,470.
Tin was down $100 at $15,900/16,050.
