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BASE METALS: Comex Copper Flat On U.S., European Debt Worries
Jul 15,2011 10:16CST
industry news
Copper futures traded near the unchanged mark Thursday.

Jul 14, 2011 (Dow Jones Commodities News via Comtex) -- --U.S., euro-zone debt worries pressure copper

--Futures pare losses after reports on U.S. unemployment, producer prices, retail sales

--Copper bound in narrow range near $4.40/lb for a third day

By Matt Day

NEW YORK (Dow Jones)--Copper futures traded near the unchanged mark Thursday, falling slightly as ongoing negotiations on raising the U.S. debt limit and concern about European sovereign debt cloud the outlook for growth-sensitive industrial metals.

The most actively traded contract, for September delivery, recently traded 0.2 cent, or 0.1%, lower, at $4.4015 a pound on the Comex division of the New York Mercantile Exchange.

Copper futures have pivoted in a narrow range this week, as worries about the global economy left many traders reluctant to place large bets on assets such as commodities, which are seen as risky bets should growth stumble. Copper in particular is sensitive to the growth outlook because of its widespread use in construction and manufacturing.

Copper futures pared their earlier losses after a set of U.S. economic reports Thursday that showed an uptick in retail sales and declines in producer prices and weekly jobless claims, but market participants are likely to continue to keep an eye on negotiations about increasing the U.S. government's ability to borrow.

Moody's Investors Service late Wednesday sounded a warning on the slow pace of negotiations, citing a "rising possibility" that the debt limit won't be raised in time to allow the U.S. to meet all of its obligations to creditors.

"For now, focus is firmly on concerns in the U.S., specifically related to Moody's decision to place the U.S. sovereign rating on review," Standard Bank analyst Marc Ground said in a note.

Concerns also persist that China, the world's largest metals consumer, may upset growth as it fights to limit inflation and prevent asset bubbles.

China's economy expanded at a better-than-expected rate of 9.5% during the second quarter, a signal to metals traders that worries of a serious slowdown may have been overdone, but also a reminder that the country may continue to tighten its monetary policy.

"With China still tightening monetary policy, the concern remains that the brakes are applied too hard and, as a consequence, Chinese copper demand weakens," analysts with Citigroup Global Markets said in a note.

Citi analysts add that copper traders are also likely to take cues from developments in Europe's sovereign-debt crisis, as recent worries about the economic health of Ireland and Italy rattled global markets.

Comex copper flat
US debt limit
European sovereign debt

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