Oct 11, 2011 NEW YORK (Dow Jones)--Copper futures fell Tuesday, ending a four-session streak of gains as investor pessimism ahead of a closely watched vote on the euro zone's rescue fund kept investors cautious about the outlook for the growth-sensitive industrial metal.
Copper for December delivery, the most actively traded contract, fell 7.75 cents, or 2.3%, to $3.2905 a pound on the Comex division of the New York Mercantile Exchange.
"Copper continues to have difficulty finding too much support," said Sterling Smith, a market analyst at Country Hedging. "The situation in Europe remains very much in the air. That allows markets that are economically sensitive like copper to turn and give back their gains."
Traders Tuesday were wary of holding risky assets as lawmakers in Slovakia prepared to vote on the euro zone's rescue fund. Slovakia is the only EU member state that has yet to approve an expansion of the European Financial Stability Facility. The EFSF was designed to contain the currency union's debt crisis.
Copper is particularly sensitive to the economic outlook because of its widespread uses across industries, and tends to fall when investors are dumping perceived risky assets.
Approval of the EFSF by Slovakia's parliament isn't guaranteed, market participants said, and a failure to approve an expanded fund could rattle investor faith in Europe's ability to stave off a credit crunch.
Copper had staged a tentative rebound after hitting 14-month lows last week, rising for four consecutive sessions as investors who had bet on falling copper prices reversed those bets. The copper market was under intense pressure beginning in September as investors cut their expectations for global growth. Risky assets were also pressed by fears that the debt-laden euro zone was sliding toward a financial crisis.
"A return of the sovereign debt doom and gloom, plus the added uncertainty surrounding the Slovakian vote" on the EFSF kept pressure on growth-sensitive metals, Standard Bank analyst Leon Westgate said in a note.
Speculative investors turned bearish on the prospects for copper futures and options in August, reversing almost two years of bullish bets, according to Commodity Futures Trading Commission data. Such traders have held more bearish than bullish bets for five of the last seven weeks tracked by the CFTC.
Copper settlements (ranges include electronic and pit trading):
Oct $3.2875; down 7.45 cents; Range $3.2340-$3.2970
Dec $3.2905; down 7.75 cents; Range $3.2305-$3.3870