Aug 18, 2011 (Dow Jones)--Copper prices tumbled Thursday as investors shed risky assets amid weak U.S. economic data and fresh concerns about Europe's banks.
The most actively traded contract, for September delivery, recently was down 5.75 cents, or 1.4%, at $3.9745 a pound on the Comex division of the New York Mercantile Exchange.
Thinly traded August-delivery copper was down 3.50 cents, or 0.9%, at $3.9940 a pound after just 11 contracts changed hands.
U.S. consumer prices rose a seasonally adjusted 0.5% in July from the prior month, propelled by higher gasoline prices and food costs.
Meanwhile, weekly claims for jobless benefits rose by 9,000 to a seasonally adjusted 408,000 in the week ended Aug. 13. Economists believe the economy adds more jobs than it sheds when unemployment claims are below 400,000.
"We're getting number after number indicating economic weakness here in the U.S. and European data has been leaning negative]," said Bill O'Neill, a principal with LOGIC Advisors. "This is all taking a toll [on copper prices]."
Copper is known as the commodity with a doctorate in economics because fluctuations in its price tend to forecast shifts in business cycles. The red metal is widely used in goods ranging from laptops and trucks to industrial equipment and building wire for construction projects, and demand for the metal tends to wane as economic activity slows.
Adding to the negative tone, European bank shares slumped by 3% to 5% on concerns that the euro-zone's sovereign debt crisis could destabilize its banks and seep into the global financial system.
The declines come a week after French bank shares tumbled as much as 20% on concerns about capitalization. The French banking regulator later said the worries were unfounded.
Meanwhile, the World Bureau of Metals Statistics said late Wednesday that the global copper market was in a 107,400 metric ton surplus in the first half of 2011. The news poured some cold water over copper bulls, many of whom have forecast copper supply to fall short of demand this year.