good buying opportunity, page-2

Maybe those lemmings knew something...

Metals dive on report of fund losses
Fri Feb 2, 2007 5:56 PM GMT
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LONDON (Reuters) - Base metals prices fell sharply on
the London Metal Exchange on Friday on a report of heavy losses
at a hedge fund and in the absence of Chinese buyers, dealers
said.
"The market is collapsing," a European trader said.
Three-months zinc fell by nearly 9 percent at one
stage, copper was down by over 6 percent and aluminium dropped by some 3 percent in a general
sell-off.
Traders said the selling was mostly on behalf of funds,
triggered by a report of heavy losses at a hedge fund that
specialises in metals trading.
Once prices hit specific chart levels the fall for most
metals accelerated.
"Fund liquidation...a lot of stops triggered -- a lot of the
stuff on the back of the Red Kite news," the trader said.
Hedge fund Red Kite, which posted strong gains in 2006, has
suffered a roughly 20 percent loss in the first days of January
and is now trying to stall investors who want to pull money out,
The Wall Street Journal reported.
"It is quite scary, actually, a lot of volume going through
and no one is buying the stuff," analyst Michael Widmer at
Calyon said.
By 1520 GMT benchmark copper for delivery in three months was at $5,330/5,340 per tonne,
down from the close of
$5,600 on Thursday.
Widmer said the market was also influenced by data from the
United States this week.
The global indicator produced by JP Morgan with research and
supply management organisations fell to 52.4 in January -- its
lowest since August 2005 -- from 53.4 in December.
Global factory output growth also sank to its lowest in
three and a half years to 53.0 from 54.3.
Copper is down more than 12 percent since the start of the
year and around $3,000 below the peak it hit in May last year.
Zinc was down $300 at $3,090/3,110.
"There's no evidence of fresh buying from speculative
quarters, and all the indications are that the Chinese are going
to wait until after the New Year holidays before coming to the
market," another dealer said.
In previous months, some of the investment funds that play
the commodities markets have used the first few days of the
month to add more metals to their portfolios, but that pattern
has become less pronounced recently.


http://za.today.reuters.com/news/newsArticle.aspx?type=businessNews&storyID=2007-02-02T155653Z_01_BAN248402_RTRIDST_0_OZABS-MARKETS-METALS-20070202.XML&archived=False