By Silvia Antonioli
LONDON (Reuters) - A sudden plunge in the price of copper pulled the shares of global miner Glencore
Copper prices slid to their lowest in 5-1/2 years after a downward revision to global growth forecasts by the World Bank and shares in Glencore lost as much as 12 percent to 236.20 pence on Wednesday. [MET/L]. Glencore, among the large diversified miners, has the largest exposure to copper. [MET/L]
If sustained, the steeper fall in copper prices compared with that of iron ore so far this year, might derail any potential move by Glencore to take over Australian miner Rio Tinto
After Glencore's first takeover approach was rebuffed by Rio last summer, the market was widely expecting Swiss-based Glencore to make another attempt this year.
The steeper fall last year in prices of iron compared with base metals made Rio a more affordable target for Glencore.
That has been partially reversed this year.
Copper has lost almost 12 percent of its value, while iron ore has lost less than 5 percent
"The fall in copper prices makes it much harder for Glencore to take over Rio as the share exchange ratio is not in their favor," said London-based analyst Paul Gait at Bernstein Research. "The issue is that Glencore's commodity mix hasn't played in its favor in the last few weeks and Rio is looking more expensive as a consequence."
Gait however, like many other analysts, thought fundamentals for copper looked much better that those of iron ore and expected this situation to be short-lived.
Glencore's stock, first listed in London in 2011, was the worst loser among the blue-chip FTSE-100 companies on Wednesday, indicated down 11.5 percent at 238.05 pence at 0830 EST.
The second biggest loser was Anglo American
Rio Tinto and BHP Billiton
Other stocks battered by the steep fall in copper prices were pure copper miners such as Kaz Minerals
(Editing by Elaine Hardcastle)
