Copper Futures Tumble as European Debt Crisis May Reduce Growth

Sept. 26 (Bloomberg) –Copper futures fell, heading for the biggest three-session loss since December 2008, on concern that a failure to contain Europe's sovereign-debt crisis may curb world growth and spur a slump in commodity demand.

U.S. Treasury Secretary Timothy F. Geithner called on governments to unite with the European Central Bank to boost the capacity of their 440 billion-euro ($592 billion) bailout fund, warning failure to act threatened "cascading default, bank runs and catastrophic risk.” The Standard & Poor's GSCI Index of 24 commodities fell to the lowest since Dec. 1.

"The global economy, in particular the western economies, are sort of in a quasi-recessionary environment,” Bart Melek, an analyst at TD Securities in Toronto, said in a telephone interview. "This means that copper-demand growth is going to moderate for a bit.”

Copper futures for December delivery declined 8.65 cents, or 2.6 percent, to $3.1935 a pound at 10:37 a.m. on the Comex in New York. A close at that price would mark a three-session drop of 15 percent, the most since October 2008. Earlier, the metal touched $307.15, the lowest since July 22, 2010.

Speculators were their most bearish on copper since July 2009, as managed-money funds held net-short positions, or wagers on falling prices, totaling 6,672 futures and options contracts as of Sept. 20, data from the U.S. Commodity Futures Trading Commission compiled by Bloomberg showed.

Copper has the most significant "fundamental” risk of the industrial metals because prices are well above the marginal cost of production, analysts at Macquarie Group Ltd., including Duncan Hobbs in London, wrote in a report today.

On the London Metal Exchange, copper for delivery in three months fell $286.50, or 3.9 percent, to $7,073.50 a metric ton ($3.21) a pound.

Nickel, lead and zinc prices also fell in London. Aluminum was little changed, and tin rose.