Copper Slips Off 1-Month High As EU Fears Flare

Dec 06, 2011 NEW YORK (Dow Jones)--Copper prices fell on renewed worries about Europe's sovereign debt crisis triggered by Standard & Poor's decision to place 15 euro-zone countries on review for a possible downgrade.

December-delivery copper fell 3.85 cents, or 1.1%, to settle at $3.5655 a pound on the Comex division of the New York Mercantile Exchange.

The most actively-traded contract, for March delivery, settled down 4 cents, or 1.1%, at $3.5755 a pound.

The contract retreated from Monday's one-month high settlement of $3.6155 a pound in the wake of credit ratings firm S&P's decision to put on review Germany, France and 13 other euro-zone members. Such announcements typically indicate a 50% chance of a downgrade within 90 days.

The move "stamped all over the green shoots of euro-zone confidence," said traders at Sucden Financial.

Copper, which is sensitive to slower economic growth, retreated on concern that a euro-zone downgrade will raise the cost of borrowing for affected countries and damp economic activity.

"The real question for most commodities at the moment is demand--will there be any if Europe implodes and what does that do to Chinese demand and US. .demand and the world economy," said Frank Lesh, broker and futures analyst with FuturePath Trading in Chicago.

However, copper has likely set the low for the year, said RBC Capital Markets Global Futures vice president George Gero.

"I think you've seen the downside around $3.30," Gero said.

Moreover, as Japan moves to rebuild its infrastructure following March's earthquake and tsunami and as the likelihood of some form of U.S. and European fiscal or monetary stimulus increases, copper prices are likely to rebound in 2012, he added.

Copper settlements (ranges include electronic and pit trading):
Dec $3.5655; down 3.85 cents; Range $3.5135-$3.5660
Mar $3.5755; down 4.00 cents; Range $3.5250-$3.6000