copper trade losses spark fear of defaults

Thanks J Sinclair.


Copper Trade Losses Spark Fear of Defaults

"He added that the banks were bleeding heavily because of a mismatch between their short-term and long-term futures contracts."
By Ambrose Evans-Pritchard
The Telegraph, London
Thursday, May 18, 2006

The risk of defaults was hanging over the London Metal Exchange last night after a clutch of clients failed to meet margin calls on losing copper trades, leaving brokers struggling frantically to match their books.

The liquidity crunch follows another day of wild gyrations at the exchange, where copper, aluminium, zinc, and lead all tumbled on bad US inflation data after failing to conquer new highs.

Copper fell 3.3 percent to $8,080 a tonne in late trading. "The hedge books of the banks are seriously underwater on copper, but apart from that there are now brokers in trouble because clients can't meet the margin payments," said a market source.
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