By Ese Erheriene
LONDON--Base metals closed lower in London Wednesday as risk-averse market participants sold down their positions, worried about the prospects for China despite Tuesday's attempt by the country's central bank to stimulate the economy of the world's biggest buyer of metals.
The London Metal Exchange's three-month copper contract was down 2.7% at $4,929.50 a metric ton in afternoon European trading, heading back below the psychologically important $5,000 mark during the session.
All the other base metals closed lower. Aluminum was down 1.7% at $1,531 a ton, zinc was down 2.2% at $1,700.50 a ton, nickel was down 1.4% at $9,570 a ton, lead was down 1.9% at $1,648 a ton and tin was down 2.1% at $13,945 a ton.
Industrial metals started the day lower after the Shanghai Composite Index closed down for the third day this week, falling 1.3%.
"The metals markets have switched back to risk-off mode again today and find themselves under corresponding selling pressure," said Commerzbank AG in a note.
A cut in interest rates by the People's Bank of China on Tuesday provided only brief respite to prices, doing little to alleviate the market's concerns about the slowing of China's economy. The central bank's moves followed a series of economic interventions by the government in recent weeks.
Going forward, some analysts are focused on concerns over whether supply will outpace demand next year and cap price gains. Aluminum and copper are causing particular concern, not least given the sheer size of these two markets.
"With global demand growth having slowed sharply and the mining miniboom not over yet, we think copper will stay in supply surplus in 2016," BNP Paribas SA said in a note.
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