Forexpros – Copper futures pared losses on Thursday, as market sentiment was lifted by better-than-expected data on German business confidence, but prices remained under pressure amid concerns over the outlook for global growth and the ongoing debt crisis in the euro zone.
On the Comex division of the New York Mercantile Exchange, copper futures for March delivery traded at USD3.822 a pound during European morning trade, shedding 0.3%.
It earlier fell by as much as 0.65% to trade at a session low USD3.808 a pound.
German research institute Ifo said its Business Climate Index rose to a seasonally adjusted 109.6 in February from a reading of 108.3 the previous month, surpassing expectations for an increase to 108.8.
The data fuelled hopes that the euro zone’s largest economy was weathering the impact of the debt crisis in the region and may avoid slipping into a recession.
But investors remained jittery amid sustained concerns over whether a second EUR130 billion bailout for Greece will be enough to resolve the country’s fiscal woes as the economic situation continues to deteriorate.
On Wednesday, Fitch Ratings cut Greece’s credit rating to C from CCC and reiterated that a bond-swap agreement with private creditors would be a restricted default.
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.
Weak manufacturing data on Wednesday from Europe and top consumer China, as well as disappointing U.S. housing data further dampened the appeal of the industrial metal.
Copper is sensitive to the economic outlook because of its widespread uses in construction and manufacturing.
Concerns over a slowdown in demand from China also weighed amid speculation Chinese Premier Wen Jiabao will set a lower target for economic growth this year.
China’s Wen will target an expansion of less than 8% in his report to the National People’s Congress in Beijing on March 5. The government had an 8% goal from 2005 to 2011.
Copper prices have rallied nearly 11% since the start of 2012, buoyed by hopes that Chinese demand would pick up after the Lunar New Year in late-January, but demand from the Asian country has remained slack, raising concern prices could retreat sharply.
China is the world’s largest copper consumer, accounting for almost 40% of world consumption last year.
Elsewhere on the Comex, gold for April delivery rose 0.5% to trade at a three-month high of USD1,780.15 a troy ounce, while silver for March delivery rallied 1% to trade at USD34.59 a troy ounce, the highest since November 15.
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