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BASE METALS: Comex Copper Pares Losses As Equities Rally
Oct 19,2011 08:59CST
industry news
Source:SMM
Copper futures pared their loses as equity markets reversed course in afternoon trade; however, downbeat news from China and worries about Europe kept copper in negative territory.

Oct 18, 2011 NEW YORK (Dow Jones)--Copper futures pared their loses as equity markets reversed course in afternoon trade; however, downbeat news from China and worries about Europe kept copper in negative territory.

The most-actively traded contract, for December delivery, fell 1.80 cents, or 0.5%, to settle at $3.3600 a pound on the Comex division of the New York Mercantile Exchange. Thinly traded October-delivery copper settled down 1.80 cents, or 0.5%, at $3.3555 a pound.

The Standard & Poor's 500 index rallied on strong earnings from the financial sector, reversing earlier losses and rising 1.3% to 1216.04. Copper prices followed the stock markets higher, as both stocks and the industrial metal are considered leading economic indicators and tend to move in tandem.

Copper futures grazed lows of $3.2575 earlier in the day, as downbeat news from top consumer China weighed on investor sentiment. China said its economy grew 9.1% during the third quarter compared with the same period last year. This was less than the median 9.25% gain forecast, and down from 9.5% in the second quarter.

"Slower economic activity in Europe has hit China, the world's most important commodity consumer, quite considerably," Bart Melek, head of commodity strategy at TD Securities, said in a note to clients.

European sovereign-debt worries swelled after Moody's Investors Service said the stable outlook of France's triple-A rating was under pressure. It warned that France may face a number of challenges in coming months, such as the possible need to support other euro-zone members or its own banks.

Europe, as a region, is second behind China in global copper consumption, and debt problems there are damping demand for the metal.

However, euro-zone leaders are due to hold a summit to address these concerns this weekend, which may see copper prices stabilize, Edward Meir, senior commodity metals analyst with MF Global, said in a note to clients.

"Despite the current weakness, we think markets will reverse course over the course of the week as we head into a key weekend where the Europeans have to come up with something convincing to show investors," Meir said.

Copper settlements (ranges include electronic and pit trading):
Oct $3.3555; down 1.80 cents; Range $3.2700-$3.3555
Dec $3.3600; down 1.80 cents; Range $3.2575-$3.3745
 

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