Dollar, China worries drive copper to 34-month low

Industrial metal prices buckled under the weight of a U.S. dollar rally and fears of waning Chinese demand growth Tuesday, with the price of copper in New York sinking below the psychological $2.00 per lb level for the first time since December 2005.

At the New York Mercantile Exchange's COMEX division, copper for December delivery fell as low as $1.9920 a lb, before settling at $2.0070 a lb, down over 5 percent from Monday's closing level.

Since July, the benchmark December contract has surrendered more than 50 percent of its value.

Copper on the London Metal Exchange closed at $4,500 a tonne, down 4.7 percent from $4,720 Monday.

Confidence in China's ability to withstand a global economic slowdown was shaken after data Monday showed the country's economic growth rate fell to 9 percent in the third quarter from 10.1 percent in the second quarter, and factory output dropped to a six-year low.

Falling metals prices and a worsening demand outlook has prompted world producers to cut back output in nickel, aluminium and zinc, but most copper producers are still making money.

Adding to negative sentiment, the dollar hit its highest in 1-1/2 years versus a basket of currencies.

Metals are priced in dollars, which makes them expensive for holders of other currencies when the dollar rises.

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