Forexpros – Copper futures extended sharp losses on Wednesday, tumbling to a one-month low after poor demand at an auction of 10-year German government bonds exacerbated fears over the debt crisis in the euro zone.
On the Comex division of the New York Mercantile Exchange, copper futures for December delivery traded at USD3.261 a pound during European morning trade, tumbling 2.15%.
It earlier fell by as much as 2.45% to trade at USD3.252 a pound, the lowest since October 24.
Concerns over the euro zone’s debt crisis intensified after Germany’s Treasury sold just EUR3.64 billion in 10-year bonds out of the maximum EUR6 billion offered in an auction earlier.
Meanwhile, preliminary data released earlier showed that manufacturing activity in the euro zone slumped to the lowest level since July 2009 in November, falling to 46.4 from 47.1 in October.
Separate data showed that manufacturing output in Germany also dropped to a 28-month low of 47.9, underlining fears that the euro zone could be slipping into a recession.
Also Wednesday, official data showed that industrial orders in the euro zone fell significantly more-than-expected in September, tumbling 6.4% outstripping expectations for a 2.7% decline.
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 weeks.
Copper prices came under pressure during the Asian trading session after a preliminary reading of the HSBC China purchasing managers’ index fell to a contractionary reading of 48.0 in November, down from 51.0 in October.
It was the lowest level since March 2009, renewing fears over a ‘hard landing’ for the world’s largest copper consumer.
The news saw risk aversion sharpen, boosting demand for the safe haven greenback. The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.8% to trade at 79.03.
A stronger dollar reduces demand for raw materials as an alternative investment and makes dollar-priced commodities more expensive for holders of other currencies.
Elsewhere on the Comex, gold for December delivery fell 0.88% to trade at USD1,687.45 a troy ounce, while silver for December delivery plunged 4.1% to trade at USD31.60 a troy ounce.
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