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ECB sees only gradual metals price rises after fall

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[FRANKFURT] Weaker demand from China is driving the big fall in metals prices and any rebound will be only gradual, a study by the European Central Bank found on Monday, adding to evidence that low commodity prices may be here to stay.

In its monthly bulletin, the ECB concludes that the falling cost of iron ore for steel, aluminium and copper reflected "the slowdown in the growth of emerging economies" and was likely to stay for the "short term".

The finding is a recognition that China is slowing economically, a shift that will put a brake on Europe's economy, dampen the inflation outlook, and may ultimately require more ECB money printing for longer.

"Growth in demand for commodities in China is expected to remain weaker than in the past, consistent with the gradual rebalancing of the country's growth path," the ECB said in its monthly economic bulletin.

"The outlook for metal prices its therefore one of only gradual rises."

"More generally, growth in emerging market economies, whose output tends to be more commodity-intensive than that of advanced economies, is slowing."

REUTERS