Oct 19, 2011 NEW YORK (Dow Jones)--Copper futures slumped to their lowest levels in more than one week Wednesday as worries about the pace of progress in combating Europe's debt woes sent traders cashing out of the growth-sensitive metal.
The most actively traded contract, for December delivery, fell 10.2 cents, or 3%, to settle at $3.258 a pound on the Comex division of the New York Mercantile Exchange, the lowest settlement price since Oct. 6.
Recent economic readings on top consumer China have missed expectations, keeping copper prices under pressure, said Dave Meger, director of metals trading with Vision Financial Markets. "That, in tandem with ongoing concerns about EU sovereign debt, portend concerns about copper demand moving forward."
Moody's Investors Service cut Spain's government debt rating by two notches late Tuesday, citing market stress and deteriorating growth prospects.
The euro and other perceived risky assets rose in choppy trading Wednesday, providing a lift to copper, but that support faded late in the day as optimism about the euro zone's ability to stave off a credit crunch faded.
The euro gave up most of its gains against the U.S. dollar, pressuring dollar-denominated commodities.
"A lot of commodities, copper included, are taking their day-to-day cues from the euro zone," said Matt Zeman, head of trading at Kingsview Financial.
European Union officials are due to meet for a regional summit this weekend, and a report of a deal between France and Germany to increase the size of the euro zone rescue fund had sparked an after-market rally in copper prices Tuesday.
Copper futures quickly receded after hopes of a swift resolution were extinguished by EU officials, who said the earlier reports were wrong.
"It just goes to show that people will be very willing to put on risk if they feel like a resolution is close in the euro zone," Zeman said.
Copper, along with other commodities, is considered a riskier asset than stocks or bonds, and investors tend to shy away from such assets when the economic outlook seems more uncertain.
Copper settlements (ranges include electronic and pit trading):
Oct $3.2540; down 10.15 cents; Range $3.2500-$3.3080
Dec $3.2580; down 10.20 cents; Range $3.2410-$3.3775