By: Martin Hayes

London 10/10/2012 - Base metals fell away during Wednesday LME premarket trading, extending this week's softer performance, with many hitting one-month lows on growing doubts over economic prospects.

The euro continued to ease amid renewed eurozone debt instability, while concerns over metal demand weighed after the International Monetary Fund cut its global growth forecast and there was a soft earnings report from Alcoa, the world's largest aluminium producer.

"Metals prices are in retreat and what were bouts of consolidation are now looking more like corrections," William Adams of FastMarkets said.

Aluminium, zinc and lead all fell to one-month lows, nickel its weakest for three weeks and copper a two-weak nadir, while tin fell to its cheapest for a week.

The IMF cut its growth forecast for the second time since April to 3.3 percent for this year from a previous 3.5 percent, warning of a possible recession should US and European policymakers fail to fix their economic problems.

The IMF has also identified the eurozone as the largest threat to the global economy, urging policymakers to strengthen financial and fiscal ties within the region or risk a potentially massive flight of capital from its struggling banks, it said its latest Global Financial Stability Report today.

Alcoa, meanwhile, reported a third-quarter loss of $143 million late Tuesday, slightly better than forecast, but it also cut its 2012 global aluminium demand projection by one percentage point to six percent due to the slowdown in China.

"Given more talk of a slower global economy, as per the recent IMF outlook and with several metal companies pointing to slower demand growth from China, it is unsurprising that metals are struggling to hold onto all their recent gains," Adams added.

Fresh worries about the financial stability of Spain and Greece dampened market sentiment and sent the euro to a one-week low at 1.2832 versus the dollar - it was recently around 1.2865.

Spain's announcement that it would not yet be seeking a bailout from the European Central Bank caused yields on 10-year Spanish bonds to rise towards six percent. European leaders this week gave Greece a deadline of October 18 to implement additional economic reforms in exchange for fresh financial aid.

On the data side, the Fed "Beige Book" for September is scheduled later today.


COPPER FALLS TO NEAR $8,100/T, BIG LEAD/ZINC INVENTORY INCREASES

Copper touched $8,116, its lowest since September 26, and then traded back up to $8,135 per tonne, still down $10 from Tuesday. Warehouse stocks fell 1,625 tonnes to 219,425 tonnes. In the spreads, tightness remains evident, with Oct/Oct 31 at $4.00/5.00 backwardation.

Lead hit $2,210, its lowest since September 14, before settling at $2,212, a $39.50 decline from Tuesday. Stocks jumped a net 17,825 tonnes to 265,675 tonnes from what had been 21-month lows, ending a 23-day downtrend. The increase reflected a 20,450-tonne warranting in Antwerp - metal being re-warehoused by a trader.

Zinc touched $1,990, down $17 and its weakest since September 11. Stocks rose 8,075 tonnes to 1,009,575 tonnes, the highest since late July, all of which was warranted in New Orleans. In two days, 14,900 tonnes have been warranted in this location.

In other metals, aluminium hit a one-month low of $2,119.75 before trading at $2,026, a $39 loss. Inventories were down 8,225 tonnes at 5,025,775 tonnes.

Nickel hit $17,750, its lowest since September 20, before trading at $17,785, down $145. Stocks were up 102 tonnes at 124,350 tonnes.

Tin business at $21,700 was down $125 - earlier it touched $21,505, its weakest since October 1. Stocks, which had been static for two days, increased 60 tonnes to 12,235 tonnes.

Steel billet was quoted at $360/365, while in the minors cobalt was indicated at $27,300/29,000 and molybdenum was neglected.


(Additional reporting by Perrine Faye and Gregory Holt, editing by Mark Shaw)