Forexpros – Copper futures turned lower during European morning hours on Tuesday, as investors cut their exposure to growth-linked assets amid renewed concerns over Spain’s deteriorating financial situation.
Market participants were also looking ahead to emergency talks by the Group of Seven industrialized nations later in the day.
On the Comex division of the New York Mercantile Exchange, copper futures for July delivery traded at USD3.297 a pound during European morning trade, dipping 0.3%.
It earlier rose by as much as 0.6% to trade at a session high of USD3.351 a pound. Prices touched USD3.238 a pound on Monday, the lowest since December 15, 2011.
Copper’s losses came after Spain’s Treasury Minister Cristobal Montoro said that financial markets were currently closed to Spain because of the high level of the country’s borrowing costs.
The comments sparked fresh concerns that Madrid will be forced to seek an international bailout in order to shore up its fragile banking system.
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.
Copper futures were higher earlier in the session amid hopes global policymakers will increase efforts to boost the world economy.
Finance ministers from the Group of Seven leading industrialized nations were to hold an emergency conference call later in the day to discuss the euro zone’s ongoing debt crisis, now in its third year.
The G7 discussions later Tuesday precede a summit of leaders from the Group of 20 in Los Cabos, Mexico, on June 18 and 19.
Traders are also closely watching several monetary policy meetings due this week, including the European Central Bank on Wednesday and Bank of England on Thursday, for clues on their responses to weakening global growth.
There is some speculation by market analysts that the ECB could announce liquidity injections in to Europe’s troubled financial system. Other analysts expect the central bank to renew its suspended government bond-buying program.
In addition, Federal Reserve Chairman Ben Bernanke will testify on Thursday before a congressional committee about the state of the U.S. economy.
Copper prices have been on a rapid decline since the start of May, amid growing fears over an escalating debt crisis in the euro zone and a deeper-than-expected slowdown in China.
Comex copper prices lost nearly 12.5% in May, the biggest drop since December 2008. Prices are more than 29% below last year’s record high of USD4.648 a pound.
A deeper slowdown in China, the world’s second biggest economy, would impair a global expansion that is already faltering because of the implementation of harsh austerity measures in Europe.
Copper is sensitive to the global economic growth outlook because of its widespread uses across industries.
Elsewhere on the Comex, gold for August delivery was up 0.1% to trade at USD1,614.95 a troy ounce, while silver for July delivery added 0.3% to trade at USD28.09 a troy ounce.
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