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BASE METALS: Copper Slumps On Weak German Data, Growth Fears
Aug 17,2011 09:00CST
industry news
Source:SMM
Copper prices pushed lower as weak European growth data and lower equity markets stoked concerns about a global economic slowdown.

Aug 16, 2011 NEW YORK (Dow Jones)--Copper prices pushed lower as weak European growth data and lower equity markets stoked concerns about a global economic slowdown.

The most actively traded contract, for September delivery, was recently down 5.85 cents, or 1.5%, at $3.9735 a pound on the Comex division of the New York Mercantile Exchange.

The front-month contract, for August delivery, was down 7 cents, or 1.7%, at $3.9615 a pound after just three contracts changed hands.

Germany, the largest economy in the euro zone, reported a disappointing slowdown in second quarter growth. Gross domestic product, the broadest measure of the goods and services produced by the economy, rose 0.1% in the second quarter, down from 1.3% in the first quarter.

"The tepid growth figure comes on the heels of similar numbers out of France last week, showing the economy there basically stuck in neutral," said Ed Meir, base metals analyst with MF Global. "What poor macro readings do ...is to exert gradual, but consistent pressure on prices, while keeping rallies in check."

The downbeat data is a negative sign for copper prices, as the red metal is widely used in everyday goods from laptops to cars and demand for such products wanes as the economy slows.

Equities opened in negative territory with the Standard & Poor's 500 index recently trading down 0.9% at 1194 as risk appetite retreated amid rekindled fears about the fragile global economy.

A stronger dollar also pressured copper futures lower by damping demand from investors using foreign currencies. The dollar-denominated contracts appear more expensive to such buyers when the dollar strengthens against their currencies.

Copper traders await a meeting between French President Nicolas Sarkozy and German Chancellor Angela Merkel, due later Tuesday, where the leaders will discuss economic governance of the euro zone.

 

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