Forexpros – Copper futures traded near a one-month low during European morning hours on Wednesday, as ongoing concerns over the deteriorating situation in the euro zone reduced the appeal of growth-linked assets.
Prices remained supported amid expectations policy makers around the world will implement stimulus measures to help spur weak global growth.
On the Comex division of the New York Mercantile Exchange, copper futures for September delivery traded at USD3.360 a pound during European morning trade, easing up 0.2%.
It earlier fell by as much as 0.6% to trade at USD3.333 a pound, the lowest since June 29.
Copper prices turned higher as sentiment found mild support after European Central Bank Governing Council member Ewald Nowotny said there were arguments in favor of giving Europe’s permanent rescue fund a banking license.
Granting a banking license to Europe’s permanent bailout fund, the European Stability Mechanism, would give it access to ECB lending.
But ongoing concerns that Spain will become the next European country to seek a bailout dampened the appeal of the industrial metal.
The yield on Spanish 10-year bonds rose to a record 7.73% early Wednesday, well above the 7% threshold widely considered unsustainable in the long term, amid growing fears that Spain will need a full-scale bailout.
Meanwhile, fears over a Greek exit from the euro zone resurfaced, amid worries whether Athens can meet the conditions of its international bailout.
Adding to the gloom, ratings agency Moody’s lowered its outlook on the triple-A long-term rating of the region’s bailout fund, the European Financial Stability Facility, to negative from stable.
The move follows similar revisions to the outlooks on the sovereign ratings of Germany, the Netherlands and Luxembourg. Moody’s rates all three at AAA.
Europe as a region is second in global demand for the industrial metal. Prices have tracked investor sentiment toward the euro zone’s debt crisis in recent months.
Prices also remained supported after the Wall Street Journal reported that a growing number of Federal Reserve officials have concluded that the central bank needs to expand its stimulus program in order to boost growth and increase job hiring.
There are also expectations in the market that China will cut its banks’ reserve requirement ratio to boost lending and support growth in the world’s largest copper consumer.
China is the world’s largest copper consumer, accounting for almost 40% of world consumption last year.
Elsewhere on the Comex, gold for August delivery rose 0.75% to trade at USD1,587.85 a troy ounce, while silver for September delivery added 0.7% to trade at USD27.00 a troy ounce.
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