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Comex May copper ends softer on fund, technical sales

NEW YORK: Comex copper futures and the London Metal Exchange (LME) three-months price slipped Friday amid liquidation related to closure of a leading hedge fund company, traders said.

Reports that Tiger Management was shuttering its six funds, some of which historically held positions in base metals, prompted small funds to shed copper and aluminum positions.

"It looked like some light stops -- funds doing light liquidation," one Comex trader said.

Tiger does not comment on its positions in the market, a company spokesman told Reuters on Friday.

Active May copper fell 0.25 cent to 80.50 cents a lb, trading a range of 79.80 to 80.90 cents.

Back month July was down the same to 80.00 cents, others were 0.25 to 0.50 cent easier.

Commission house and trade buying helped to pare losses by midday after previously lifting copper to three consecutive firmer settlements this week.

Refco analyst James Steel said Friday's declines seemed to be a mixture of speculative selling and long liquidation, and were not representative of copper's fundamental strength.

"Stops on the downside have been cleared out, but I think part of the reason the upward move is stalled is because the stock decines on the LME were so well telegraphed," Steel said. "Everybody has been expecting them."

Steel said that it would take further inventory declines before the market responded with a trend to the upside.

On Friday, LME warehouse stocks fell 4,425 metric tonnes to 757,975 tonnes, while Comex stocks were up 23 short tons to 95,852 tons in Thursday's report.

"I would say the market is favourably disposed to the upside, but for the moment a technical weakness has captured the high ground," he said.

Steel pegged near-term support in May copper at 79.50 cents a lb and resistance at 81 cents.

On the LME, three-months copper sank $16 to close at $1,764 a tonne, having suffered a loss of support around $1,770/75.

Sentiment turned bullish after nervousness associated with the closure of Tiger funds led to the loss of key technical levels.

Final estimated volumes for Comex copper totalled 10,000 contracts, against the previous official tally of 9,888 lots on Thursday.

The nine-day relative strength index (RSI) for May copper dropped to 41 on Friday, compared to 47 previously.

Technical analysts have said that an RSI reading of 70 or higher usually indicates a market is overbought, while 30 or lower means it is oversold.

Comex is a division of the New York Mercantile Exchange. -Reuters