Investing.com - Copper prices fell sharply on Monday, as the release of weak Chinese manufacturing activity data weighed as investors returned to the markets after the long New Year weekend.
Copper traders view Chinese factory activity as an indicator of the nation's copper demand, as the red metal is widely used by the sector.
The Caixin manufacturing purchasing managers’ index for December released earlier slipped to 48.2 from 48.6 in November, contracting for a tenth month and coming in below expectations for 49.0.
Meanwhile, the official manufacturing purchasing managers' index published on Friday inched up to 49.7 last month from November's three-year low of 49.6. A reading below 50.0 indicates industry contraction.
The downbeat data underlined worries the world's second largest economy may still be losing momentum despite a raft of stimulus measures in recent months.
The Asian nation is the world’s largest copper consumer, accounting for nearly 45% of world consumption.
Copper for March delivery on the Comex division of the New York Mercantile Exchange plunged 6.0 cents, or 2.8%, to trade at $2.075 a pound during morning hours in London. It earlier fell by as much as 3% to hit $2.074, the lowest in a week.
Elsewhere in metals trading, gold spiked higher amid mounting geopolitical tensions in the Middle East after Saudi Arabia cut diplomatic ties with Iran over the weekend.
The move followed a weekend storming of the Saudi embassy in Tehran in response to the kingdom's execution of a prominent Shiite cleric.
The dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.5% at 98.28, as risk-off trade boosted demand for the safe-haven yen.
Investors were looking ahead to the ISM report on U.S. manufacturing activity later in the day for further clues on the strength of the economy and the timing of future rate hikes.