NEW YORK, Aug 04, 2011 (Dow Jones Commodities News via Comtex) -- --Sustained decline in stocks has infiltrated commodities
--Copper traders watching developments in Europe
By Tatyana Shumsky
Of DOW JONES NEWSWIRES
Copper futures fell 2% on Thursday as jitters about global growth pushed equity markets to this year's lows and forced investors to shed risky assets such as commodities.
The most actively traded contract, for September delivery, settled 9.05 cents, or 2.1%, lower at $4.2355 a pound on the Comex division of the New York Mercantile Exchange.
Thinly traded August-delivery contracts fell 8.90 cents, or 2.1%, to settle at $4.2310 a pound.
The Dow Jones Industrial Average set new lows for the year at 11,524.8 as investors rushed to the safety of cash amid escalating concerns about the global economy. The sustained decline in stocks over the past two weeks has infiltrated commodity markets, which are generally viewed as a riskier asset class.
"A day like today panic selling sets in more than anything else," said Matt Zeman, head of trading at Kingsview Financial.
The rush to cash pushed up the value of the dollar against other currencies, adding more pressure to copper prices, which are denominated in dollars. Investors who hold other currencies tend to shrink away from copper futures when the greenback rallies, as the contracts appear more expensive.
The ICE Dollar Index was recently at 75.074, up from 73.858 late Wednesday in New York.
Copper traders are closely watching for developments in Europe, where Italian and Spanish government bond prices remain near record lows. Investors are concerned that these euro-zone members will struggle to pay their bills in the coming months and many are worried that the euro-zone rescue fund may be too small to bail out these large economies.
The news has kept copper futures under pressure as the euro zone is often second behind China in the global ranks of copper consumption.
Copper is often called the commodity with a degree in economics because it is used across a plethora of everyday goods, from iPhones to household plumbing, and demand for such goods tends to be closely aligned with economic growth.