Sep 26, 2011 NEW YORK (Dow Jones)--Copper carved out slight gains Monday as some investors viewed the market's steep two-day slide to 14-month lows as a good opportunity to buy, and stronger equities lifted sentiment.
The most actively traded copper contract, for December delivery, rose 0.3 cent to settle at $3.283 a pound on the Comex division of the New York Mercantile Exchange.
Futures plummeted 13% during the previous two sessions, as worries about a slowdown in global growth and instability in Europe's financial system rattled industrial commodities.
The metal fell victim to a risk-off trade in which investors dumped assets seen as risks should the global economy stumble, said Matt Zeman, head of trading with Kingsview Financial.
But U.S. equity indexes edged higher Monday on hopes for coordinated action to address Europe's debt crisis. Major European markets also ended the day with gains, providing a lift to the battered copper market. Industrial bellwether crude oil also rose.
Speculative investors, who as recently as July had been overwhelmingly bullish on the prospects for copper, began to bet that demand for industrial metals in particular would fall as the European and U.S. economies struggle. Worries mounted in recent weeks that Europe would be unable to prevent a default-spurred credit crunch, and downbeat economic outlooks by the Federal Reserve and International Monetary Fund last week pressured growth-sensitive assets.
"These are not markets for the faint of heart," traders at RBC Capital Markets said in a note. "Whether this is finally the bottom we've all been looking for remains to be seen."
Copper is vulnerable to such shifts in economic sentiment because of its widespread uses across industries, from housing and auto manufacturing to consumer electronics, and the metal can track equities markets as a proxy for investors' view of the economy.
CME Group Inc. (CME), operator of the Comex, said Friday it would increase collateral requirements to trade benchmark copper futures by 18%. The increase takes effect at the close of business Monday, the exchange operator said.
Following the change, speculative investors will be required to post $6,750 to open a futures contract and $5,000 to hold it overnight.
Copper settlements (ranges include electronic and pit trading):
Sept. $3.2750; up 0.3 cent; Range $3.1800-$3.3035
Dec. $3.2830; up 0.3 cent; Range $3.0715-$3.3565