(Recasts with updated prices) By Eric Onstad LONDON, Oct 11 (Reuters) - Aluminium and some other basemetal prices slumped on Tuesday as concern grew that a globaleconomic downturn and rising COVID-19 cases in top consumerChina would curb demand. A reversal that saw the dollar index ease in theEuropean afternoon spurred some metals to pare losses and pushedothers into positive territory.
A stronger dollar in the morning weighed on the market,making commodities priced in the U.S. currency more expensivefor buyers using other currencies.
Three-month aluminium on the London Metal Exchange(LME) was down 0.9% to $2,240 a tonne at 1610 GMT, but LMEcopper erased earlier losses and added 0.2% to $7,593.
U.S. Comex copper futures rose 0.6% to $3.45/lb.
Copper on the LME has slid 31% since touching a record peakof $10,845 in March as central banks ramped up interest rates todampen inflation and COVID-19 lockdowns in China exacerbatedeconomic growth worries. "I think the market got a bit complacent last week regardinga pivot, but that quickly subsided," said Amelia Xiao Fu, headof commodity market strategy at Bank of China International. She was referring to investor hopes the U.S. Federal Reservewould back off interest rate rises and signal a cut. "The market should be prepared for further tighteningpolicies, not only by the Fed, but other major global centralbanks, so that will cap any price advances," Fu said.
The International Monetary Fund warned on Tuesday thatglobal financial stability risks had increased and the risk of asevere downturn had risen to levels not seen since the onset ofthe COVID-19 pandemic.
Also dampening the market was news that Shanghai and otherbig Chinese cities have ramped up testing for COVID-19 asinfections rise, with some local authorities closing schools,entertainment venues and tourist spots.
China's forthcoming Communist Party Congress from Oct. 16would also keep investors trading cautiously, said Marex analystZenon Ho. "People will want to be lightly positioned into such akey event." In other metals, LME zinc declined 0.9% to $2,936.50a tonne and nickel slid 1.9% to $21,990, but lead gained 1.2% to $2,013 and tin climbed 0.9% to$20,270. For the top stories in metals and other news, click (Reporting by Eric Onstad; Additional reporting by Mai Nguyenin Hanoi; Editing by Alexander Smith and Mark Potter)
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