Copper Slips To 5-Week Low On EU Debt Worries

Nov 25, 2011 NEW YORK (Dow Jones)--A bounce in equity markets helped copper futures pare earlier losses and offset pressure from a stronger dollar, but the metal still ended Friday trade at a 5-week low amid ongoing worries about Europe's debt crisis.

Market participants remain focused on political developments in Europe, as leaders there struggle to stem the spread of sovereign debt problems to larger economies.

Copper for December delivery, the most-active contract, settled down 0.90 cent, or 0.3%, at $3.2700 a pound on the Comex division of the New York Mercantile Exchange.

Thinly traded November-delivery copper fell 0.95 cent, or 0.3%, to settle at $3.2680 a pound.

The Comex floor ended Friday at 12 p.m. Eastern Standard Time and was closed Thursday in observance of Thanksgiving Day holiday.

An upbeat U.S. stock market gave copper prices a boost, with copper futures briefly popping into positive territory. The Standard & Poor's 500 index had touched a high of 1172.66 in Friday trade, as stock prices bounced in the absence of bad news from Europe.

"The market came back nicely from its early lows, some of it seemed to be linked to stocks," said Stephen Platt, an analyst with Archer Financial Services.

Copper prices and U.S. stocks tend to move in tandem as both are growth-sensitive assets that some investors consider indicators of future economic growth.

But while equities continue to set the short-term tone for copper prices, market participants are also worried about the longer-term outlook on copper demand from top consumer China, Platt said.

"The market is still cautious about China's demand prospects. That continues to be a limiting influence on the market to the upside," he said.

The equity rally offset downward pressure from a stronger dollar. Copper futures are denominated in dollars and tend to lose their appeal to investors who hold foreign currencies when the greenback rallies.

Earlier in the day, copper futures grazed lows of $3.2040 a pound as worries about Europe gripped the market. Italian government bond yields surged well above the unsustainable 7% level amid concerns that Europe's debt problems were spreading to the larger economies in the currency bloc.

"It all translates back to what's going on in Europe right now ... that has taken the market as a whole down right now," said Bob Haberkorn, senior market strategist with RJ O'Brien.

Copper prices were subdued amid concerns that Europe's financial problems will hamper the region's economic activity and dim its demand for industrial metals like copper.

Elsewhere, the world's largest copper producer, Chile's state-owned Codelco, remains optimistic about medium and long-term copper prices, chief executive Diego Hernandez said Friday. He added that the company successfully completed its European 2012 sales talks and was in the process of wrapping up its Asian sales campaign.

"We're optimistic about longer-term prices and we had anticipated volatility this year, but we see demand remaining strong in coming years," Hernandez told reporters at a press conference.

"We don't have any indications that our clients are demanding less copper," he said.

Copper settlements (ranges include electronic and pit trading):
Nov $3.2680; down 0.95 cent; Range $3.2680-$3.2740
Dec $3.2700; down 0.90 cent; Range $3.2040-$3.3180