Metals meltdown as markets slide
SHARES tumbled yesterday as global growth fears sent metals prices into meltdown.
Copper fell by more than 6 per cent to its lowest level for more than five years and nickel was another casualty as worries over falling demand from top metals consumers such as China sparked a sell–off to follow the recent slide in oil prices.
Heavyweight UK–listed mining companies saw billions of pounds wiped from their market values, with Glencore and Anglo American both down 9 per cent.
Shares in Rio Tinto and BHP Billiton were also down as the resources–dependent FTSE 100 closed down 153.74 at 6388.46.
The turmoil in commodities markets came after the World Bank cut its global economic growth forecast for this year from 3.4 per cent to 3 per cent and for 2016 from 3.5 per cent to 3.3 per cent.
Its chief economist Kaushik Basu said: "The global economy is running on a single engine... the American one.
"This does not make for a rosy outlook for the world."
European stock markets also wobbled, but the damage was limited after legal backing for the European Central Bank, led by president Mario Draghi, to step up its stimulus programme to boost the faltering eurozone economy.
The sharp overnight fall in copper prices seems to have been driven by investor panic
The biggest fall in US retail sales for 11 months piled further pressure on share prices.
Pedro Cruz Villalon, advocate general to the European Court of Justice, said a 2012 ECB bond-buying plan, designed to help avert a break–up of the euro and unused so far, did not break EU law.
The ECB could launch a quantitative easing scheme as soon as next week to tackle deflation, but details such as whether risk is shared and covers all eurozone states have to be decided.
Julian Jessop, chief global economist at Capital Economics, said: "The sharp overnight fall in copper prices seems to have been driven by investor panic.
"Copper's reputation as a bellwether for the health of the global economy – and China in particular – means that it cannot be ignored.
"But the prices of most industrial metals have been weakening for several years and the latest moves do not mark a major change in the trends."
