Copper falls to 7-week low ahead of US midterm election

By Solomon Cefai

SINGAPORE, Nov 3 (Reuters) - Copper fell to a seven-week low on Tuesday as risk-off sentiment swept through industrial metals markets ahead of the US midterm elections, while a weaker yuan added pressure by making dollar-priced commodities more expensive for buyers in China.

Benchmark three-month copper on the London Metal Exchange was down 2.46% at $13,992 a metric ton by 0700 GMT, its lowest since September 15.

The most-traded copper contract on the Shanghai Futures Exchange fell 1.17% to 107,300 yuan ($16,081.41) a ton.

Investors are closely watching the US midterm elections for clues on future fiscal policy and spending, as well as the trajectory of the US-Iran conflict, which has clouded the global growth outlook.

"There's a lot of noise in (base metal) markets ahead of the midterms and given uncertainty over the situation in the Gulf," said David Wilson, head of metals strategy at BNP Paribas.

Investors will also look for clues on whether the outcome could affect the likelihood of a US tariff on imported copper.

The prospect of that tariff helped push copper to a record high earlier this year. Prices then fell after a Reuters report on September 10 said the White House had yet to decide on the levy, owing to affordability concerns ahead of the midterms.

Elsewhere, the dollar rose 0.38% against the yuan , weighing on copper by increasing the cost of greenback-denominated purchases for Chinese buyers.

Losses were cushioned by signs of tight physical supply in China. The Yangshan copper premium , a gauge of demand for imported metal, remained near a more than decade-high of $200 a ton on Monday amid seasonal production cuts.

Among LME metals, aluminium lost 1.45%, zinc dropped 2.32%, lead fell 1.08%, nickel lost 0.78% and tin dropped 4.14%.

On the SHFE, aluminium lost 0.49%, zinc lost 1.02%, lead dropped 1.91%, nickel gained 0.58% and tin dropped 3.15%.

($1 = 6.6480 Chinese yuan)