SHANGHAI, Dec. 20 (SMM) –The European Central Bank (ECB) overnight said in its twice-yearly Financial Stability Report that risks to the stability of the euro zone's financial system in 2H 2011 have already risen to the worst level since the bankruptcy of Lehman Brothers Inc., heightening market worries over a spread of the European debt crisis. Combined with news of the death of North Korean leader and concern that signs of a drop in China's housing inflation would depress demand outlook for industrial metals, investors with high risk appetites and cautious market players slowed their pace of buying, which caused US and European stock markets to close down. As a result, LME copper prices met resistance at the 5-day moving average of USD 7,350/mt before finally ending at USD 7,296/mt, and market activity was very light.
Markets speculate that Standard & Poor's (S&P) will very soon cut credit ratings for large eurozone economies like France, while eurozone members agree to provide EUR 150 billion for the International Monetary Fund (IMF), well below the EUR 200 billion target set in earlier December, which will keep investors cautious. In this context, LME copper prices are expected to move between USD 7,250 -7,350/mt during today's Asian trading hours, with a similar fluctuating band on the prior day. The Shanghai Composite Index will continue to struggle at around 2,200 points. SHFE copper prices will experience fluctuations, while SHFE 1203 copper contract prices will fluctuate in the RMB 53,000 -54,000/mt range. Spot copper offers will be reported between premiums of positive RMB 0-150/mt versus SHFE 1201 copper contracts.