Forexpros – Copper futures traded near the previous session’s four-week low during European morning hours on Tuesday, as ongoing concerns over the deteriorating situation in the euro zone reduced the appeal of growth-linked assets.
On the Comex division of the New York Mercantile Exchange, copper futures for September delivery traded at USD3.367 a pound during European morning trade, shedding 0.4%.
It earlier fell by as much as 0.6% to trade at a session low of USD3.359 a pound. Prices hit a four-week low of USD3.342 a pound on Monday.
Copper prices were higher during the Asian trading session, hitting a high of USD3.401, following a report showing that China’s HSBC purchasing managers index improved to 49.5 in July, its highest level since February, from a final reading of 48.2 in June.
While the index remained below the 50 level which indicates contraction, the improvement from the previous month eased concerns over a slowdown in the world’s second largest economy.
China is the world’s largest copper consumer, accounting for almost 40% of world consumption last year.
But prices turned lower after data from market research group Markit showed that its preliminary German manufacturing purchasing managers’ index fell to 43.3 in July from a final reading of 45.0 in June.
A separate report showed that manufacturing activity in the euro zone contracted at the fastest pace since May 2009 in July, adding to concerns over the region’s economic outlook.
Markets also remained jittery after ratings agency Moody’s revised its outlooks on the sovereign ratings of Germany, the Netherlands and Luxembourg to negative from stable after the U.S. market close Monday. Moody’s rates all three at AAA.
The ratings agency cited the possibility of Greece’s exit from the euro zone and the impact that would have on Spain and Italy.
Earlier in the day, Spain saw borrowing costs rise slightly at a well-received auction of three- and six-month government bonds, ahead of a meeting between German finance minister Wolfgang Sch?uble and his Spanish counterpart Luis de Guindos later in the day.
Global equities and commodities tumbled on Monday amid growing fears Spain, the euro zone’s fourth-largest economy, will be the next euro zone member to require a bailout.
The yield on Spanish 10-year bonds rose to record-high 7.59% Tuesday, well above the 7% threshold widely considered unsustainable in the long term.
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.
Elsewhere on the Comex, gold for August delivery fell 0.15% to trade at USD1,575.15 a troy ounce, while silver for September delivery dropped 0.4% to trade at USD26.93 a troy ounce.
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