Crude, copper drop on EU worries

KUALA LUMPUR, Nov 1 (Reuters): Crude oil and copper prices slipped as the collapse of MF Global Holdings heightened concerns that the euro zone crisis was far from over, while data showing a slowdown in China's factory activity also weighed on prices. MF Global, run by ex-Goldman Sachs chief executive Jon Corzine, filed for bankruptcy protection following bad bets on euro zone debt. The brokerage's meltdown in less than a week made it the biggest US casualty of Europe's debt crisis, and the seventh-largest bankruptcy by assets in US history. "While this is no Lehman Brothers, people will get more cautious because they're afraid there could be another MF Global," said Ang Kok Heng, who helps manage about $390 million at Phillip Capital Management in Kuala Lumpur, referring to the bankruptcy of Lehman Brothers, once Wall Street's No. 4 investment bank, three years ago. "Clients will be pulling out of a troubled brokerage because deposits may be frozen and trades may not be honoured." Commodities such as crude where MF Global had a strong presence have been hit harder than others. Brent crude and US oil declined for a third straight day. US crude fell 87 cents to $92.32 a barrel at 0429 GMT. ICE Brent crude oil lost 76 cents to $108.80 a barrel. "As cooler heads prevail and look around and actually start analysing the euro zone situation, they realise we still got a ways to go," said Tony Nunan, a risk manager with Tokyo-based Mitsubishi Corp. Doubts over the implementation of Greece's rescue plan re-emerged after Prime Minister George Papandreou called an unexpected referendum on Monday on the European Union bailout deal for his debt-ridden country. The move could lead to a snap election, changing the nation's leadership at a time when austerity measures are needed to secure financial aid. Adding to the gloomy picture was data showing China's big factories ran at their slowest pace in almost three years. China's official PMI recorded its lowest reading since February 2009, coming in at 50.4 for October compared with September's 51.2 and below a forecast of 51.6. But, HSBC's China Purchasing Managers' Index for October rebounded above the 50-point boom-bust demarcation for the first time since June. Gold held steady, drawing support from the economic concerns. Spot gold edged up 0.2 per cent to $1,716.79 an ounce, after staging a monthly increase of 5.5 per cent in October. US gold slipped 0.4 per cent to $1,718.70 an ounce. Three-month copper on the London Metal Exchange erased early gains to trade at $7,930 a tonne, down 0.8 percent. The prices had jumped 14 percent in October, the biggest monthly gain in 10 months. A firmer dollar, up 0.5 percent against a basket of major currencies, also weighed on commodity prices. A stronger dollar makes it more expensive for holders of other currencies to buy commodities priced in the greenback. MSCI's broadest index of Asia Pacific shares outside Japan declined 1 per cent.