Forexpros – Copper futures edged lower on Wednesday, easing off the previous session’s four-month high amid ongoing concerns over the euro zone’s sovereign debt crisis but prices continued to draw support from expectations that China will loosen its monetary policy to boost growth.
On the Comex division of the New York Mercantile Exchange, copper futures for March delivery traded at USD3.717 a pound during European morning trade, shedding 0.36%.
It earlier fell by as much as 0.65% to trade at a session low USD3.696 a pound. Prices rallied to USD3.758 on Tuesday, the highest since September 21.
Market sentiment came under pressure after ratings agency Fitch’s warned earlier that Italy could face a two-notch downgrade. The ratings firm, which currently holds Italy at an A+ rating, said last week that there was a “significant” chance that Italy will have its credit rating cut by the end of January.
Adding to worries, overnight deposits at the European Central Bank rose to yet another record high, surpassing EUR500 billion for the second consecutive day, underscoring the unwillingness of European lenders to lend to each other.
Meanwhile, Greece’s government was due to resume talks with its bond holders to discuss a voluntary write-down on Greece’s sovereign debt, after talks broke down on Friday, amid disagreements over how much money investors will lose by swapping their bonds.
Markets were also eyeing a government debt sale from Portugal, in what was being viewed as a critical test of investor’s appetite for the country’s debt.
Europe as a region is second after China in global demand for the industrial metal and worries over its economic growth have kept copper prices under pressure in recent months.
Copper prices continued to be underpinned by expectations Beijing will ease monetary policy to stimulate growth after China’s Economic Information newspaper reported earlier that the People’s Bank of China could cut banks’ reserve requirement ratio by 0.50% by the end of January, citing industry experts.
The news came a day after government data showed that China economy grew at the slowest pace in more than two years and expanded less than 9% for the first time since mid-2009.
China is the world’s largest copper consumer, accounting for almost 40% of world consumption last year.
Elsewhere on the Comex, gold for February delivery shed 0.18% to trade at USD1,652.55 a troy ounce, while silver for March delivery fell 0.25% to trade at USD30.06 a troy ounce.
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