LME copper retreats as inflation weakens rate cuts

LONDON — Copper prices reversed into the red on Wednesday and other metals pared gains after stronger-than-expected US inflation data dampened expectations for interest rate cuts and sent the dollar surging.

Aluminum earlier hit its highest in 14 months and other industrial metals touched fresh peaks as funds piled into the sector on optimism over the global economy.

But data showed that US consumer prices increased more than expected in March, casting further doubt on whether the US Federal Reserve will start cutting interest rates in June.

The data fueled a jump in the dollar index to the highest since mid-November, making commodities priced in the US currency more expensive for buyers using other currencies.

Benchmark three-month copper on the London Metal Exchange (LME) slipped 0.4% to $9,378 a metric ton by 1610 GMT, moving away from the 14-month high touched on Tuesday.

LME aluminum edged up 0.1% to $2,463.50 a ton, after earlier touching its highest since Feb. 10 last year.

Investors have been upbeat on metals demand after recent data showing that manufacturing activity expanded for the first time in six months in China and for the first time in 1-1/2 years in the United States.

The market, however, was likely to pause in the short term, he added.

LME tin gained 2.2% to $31,845 a ton, paring gains after the US data. Earlier it hit its highest in 22 months at $33,130 on the back of stockpiles dropping to their lowest in nine months and speculators covering bearish positions.

In other LME metals, nickel added 1.4% to $18,465 a ton after earlier advancing to its highest in more than five months, zinc gained 1.2% to $2,742.50 after hitting its strongest since April last year at $2,795, while lead rose 0.5% to $2,171 after touching its highest level since Jan. 24. —