Forexpros – Copper futures were lower during European morning trade on Monday, giving back some of Friday’s sharp gains as optimism over fresh measures to ease the debt crisis in the euro zone waned.
Concerns over a deeper-than-expected slowdown in Chinese economic activity and some profit taking further weighed.
On the Comex division of the New York Mercantile Exchange, copper futures for September delivery traded at USD3.472 a pound during European morning trade, shedding 0.7%.
It earlier fell by as much as 1.2% to trade at a daily low of USD3.453 a pound. Prices hit USD3.514 a pound on Friday, the highest since May 22.
Copper futures surged 4.5% on Friday, the largest one-day gain since November after European leaders unexpectedly reached an agreement on measures to help resolve the ongoing debt crisis in the euro zone.
After a two-day summit in Brussels, European Union leaders agreed to use the euro zone’s bailout funds to support struggling banks directly, without adding to national debt and also agreed to set up a joint banking supervisory body for the euro area.
In addition to the direct recapitalization of Spain’s banks, euro zone bailout funds will be able to purchase government debt in order to keep down borrowing costs.
EU leaders also agreed to devote EUR120 billion in stimulus to encourage growth and create jobs.
But market sentiment cooled on Monday, as details about how and when European leaders can put the newly agreed measures into practice still remained uncertain.
Market analysts also warned that questions remain over the long-term effectiveness of the measures, while emphasizing that they do little to address the root causes of the euro zone’s debt crisis.
Market players will be closely watching as EU finance ministers hash out the details of these plans over the next two weeks.
Meanwhile, concerns over a deeper-than-expected slowdown in Chinese economic growth lingered after official data showed that manufacturing in June grew at its slowest pace in seven months, as new export orders tumbled to lows hit in March 2009.
The rival HSBC PMI, which focuses more on small and medium-sized companies, inched up to 48.2 in June from 48.1 in May, indicating contraction for the eighth consecutive month.
China is the world’s largest copper consumer, accounting for almost 40% of world consumption last year.
A deeper slowdown in China, the world’s second-biggest economy, would impair a global expansion that is already faltering because of the euro zone’s debt crisis.
Copper gained 3.8% in June. In the March-June period, however, the red metal declined 8.7%, its worst quarter since the third quarter of 2011, as an escalating debt crisis in the euro zone and worries over a “hard landing” in China dragged prices lower.
Elsewhere on the Comex, gold for August delivery shed 0.45% to trade at USD1,596.65 a troy ounce, while silver for September delivery declined 0.55% to trade at USD27.46 a troy ounce.
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