Copper stumbles as risk-off sentiment ahead of US elections weighs

By Solomon Cefai

SINGAPORE, Nov 3 (Reuters) - Copper fell 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 top consumer China.

Benchmark three-month copper on the London Metal Exchange was down 1.27% at $14,163.50 a metric ton by 0306 GMT. The most-traded copper contract on the Shanghai Futures Exchange edged 0.18% lower to 108,380 yuan ($16,302.65) 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.

Opinion polls favour Democrats to win the House, though the Senate race remains too close to call.

The dollar rose 0.33% against the yuan , weighing on copper by increasing the cost of greenback-denominated purchases for Chinese buyers.

Losses were limited 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.

"We are seeing signs that the Chinese smelters are easing back on production rates, but that's normal for this time of year," Wilson said.

Copper stocks in SHFE-monitored warehouses were at 44,612 tons on Friday, exchange data showed, a drop of more than 75% from six months earlier.

Among LME metals, aluminium lost 1.12%, zinc fell 1.39%, lead dropped 1%, nickel lost 0.71% and tin shed 3.14%.

On the SHFE, aluminium lost 0.4%, zinc dipped 0.29%, lead fell 1.7%, nickel gained 0.63% and tin dropped 1.85%.

($1 = 6.6480 Chinese yuan)