Copper falls as Europe’s hopes for debt resolution fades
London copper fell below $8,000 on Monday on a firmer dollar and as hopes for a speedy resolution of Europe’s debt crisis waned, but the metal is on track for its biggest monthly rise since December. Continued supply disruptions at the world’s second largest copper mine, Grasberg in Indonesia, and steady spot demand in China are expected to limit losses. Three-month copper on the London Metal Exchange fell 3.1 percent to $7,920 a tonne by 0350 GMT, after edging up 0.4 percent in the previous session. It is on track to end the month 12.6 percent higher, the biggest monthly rise since December 2010.The euro zone crisis continued to worry investors. The head of Europe’s 440 billion euro bailout fund played down hopes of a quick deal with China to throw its support behind efforts to resolve the bloc’s debt crisis but said he expects Beijing to continue to buy bonds issued by the fund.
Italy’s borrowing costs also jumped to record levels on Friday, underlining its vulnerability at the heart of the debt crisis and scepticism about whether the struggling government of Prime Minister Silvio Berlusconi can deliver vital reforms.
The most-active January copper contract on the Shanghai Futures Exchange SCFc3 fell 2.5 percent to 57,780 yuan ($9,086.9) per tonne, after rising 2.1 percent on Friday. It is on track to post a 5.5 percent rise, the biggest monthly gain since December.
The dollar spiked to a three-month high against the yen on Monday after Japan intervened in the currency markets for the third time this year to stem the yen’s rise.
“Commodities are under some pressure from a firmer dollar. Technically, Shanghai copper is going to meet with some resistance near the 60,000 yuan level and volatility is to be expected,” CIFCO Future analyst Zhou Jie.
He added that whether copper can sustain October’s stellar monthly rise in November will depend on how confident Chinese consumers feel about stocking up on large inventories.
“Investors are taking a wait-and-see attitude ahead of the slew of data this week. There wasn’t particularly good news out of the euro zone this weekend, nor evidence of the anticipated monetary loosening in China yet,” Zhou said.
“People are also waiting to see if there will be any policy changes with the personnel changes to top financial regulators here.”
China named new heads to three top financial regulatory posts on Saturday, the official Xinhua news agency said, the first big step in a comprehensive leadership change that will culminate when its top political leaders retire.
Sluggish income growth led U.S. households to cut back on saving in September to raise their spending, showing the economy’s recovery remains fragile.
Japanese factory output fell in September for the first time since the devastating March earthquake, a sign the economy’s recovery from the disaster is tailing off in the face of slowing global growth, the strong yen and Europe’s lingering debt woes.
In industry news, workers at the world’s third-largest copper deposit, Chile’s Collahuasi mine, ended a partial strike begun early on Saturday after reaching an agreement with management over bonus payments.
But at Freeport McMoRan Copper & Gold’s Grasberg mine, talks with a union representing striking workers are deadlocked after a week of negotiations. The mine recently declared force majeure on copper concentrate sales.
(Editing by Miral Fahmy)
Italy’s borrowing costs also jumped to record levels on Friday, underlining its vulnerability at the heart of the debt crisis and scepticism about whether the struggling government of Prime Minister Silvio Berlusconi can deliver vital reforms.
The most-active January copper contract on the Shanghai Futures Exchange SCFc3 fell 2.5 percent to 57,780 yuan ($9,086.9) per tonne, after rising 2.1 percent on Friday. It is on track to post a 5.5 percent rise, the biggest monthly gain since December.
The dollar spiked to a three-month high against the yen on Monday after Japan intervened in the currency markets for the third time this year to stem the yen’s rise.
“Commodities are under some pressure from a firmer dollar. Technically, Shanghai copper is going to meet with some resistance near the 60,000 yuan level and volatility is to be expected,” CIFCO Future analyst Zhou Jie.
He added that whether copper can sustain October’s stellar monthly rise in November will depend on how confident Chinese consumers feel about stocking up on large inventories.
“Investors are taking a wait-and-see attitude ahead of the slew of data this week. There wasn’t particularly good news out of the euro zone this weekend, nor evidence of the anticipated monetary loosening in China yet,” Zhou said.
“People are also waiting to see if there will be any policy changes with the personnel changes to top financial regulators here.”
China named new heads to three top financial regulatory posts on Saturday, the official Xinhua news agency said, the first big step in a comprehensive leadership change that will culminate when its top political leaders retire.
Sluggish income growth led U.S. households to cut back on saving in September to raise their spending, showing the economy’s recovery remains fragile.
Japanese factory output fell in September for the first time since the devastating March earthquake, a sign the economy’s recovery from the disaster is tailing off in the face of slowing global growth, the strong yen and Europe’s lingering debt woes.
In industry news, workers at the world’s third-largest copper deposit, Chile’s Collahuasi mine, ended a partial strike begun early on Saturday after reaching an agreement with management over bonus payments.
But at Freeport McMoRan Copper & Gold’s Grasberg mine, talks with a union representing striking workers are deadlocked after a week of negotiations. The mine recently declared force majeure on copper concentrate sales.
(Editing by Miral Fahmy)
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