Jan 18, 2012 NEW YORK (Dow Jones)--Copper futures eased Wednesday as investors cashed out after the market's climb to three-month highs the previous day.
The most actively traded copper contract, for March delivery, was recently down 1.25 cents, or 0.3%, at $3.717 a pound on the Comex division of the New York Mercantile Exchange.
Futures on Tuesday settled at their highest price since late September on hopes that the Chinese government would take steps to prop up growth. The country accounts for about 40% of world copper consumption, and economic data released this month have suggested that China's economy didn't slow as much as was feared in late 2011, but was still under enough pressure that Beijing might take decisive action.
But with market activity in China quieting ahead of the Lunar New Year holiday next week, copper's rally could fizzle in the coming days, traders with RBC Capital Markets said in a note.
Copper and other growth-sensitive assets were under pressure on Wednesday from worries about global economic growth after the World Bank released a weaker growth forecast for 2012. In a report, the bank predicted 5.4% growth for developing countries, down from the 6.2% growth previously projected, and 1.4% for high-income countries, from 2.7%.
Copper is sensitive to the economic outlook because of its widespread use in construction and manufacturing.
As part of its forecast, the World Bank estimated that prices of non-oil commodities would retreat by 8.9% during the year.
Morgan Stanley this week cut its 2012 copper-price forecast by 3%, to $3.70 a pound, citing challenges to economic growth. But the investment bank said it was most bullish on copper compared with other metals, "supported by low inventories, high levels of supply disruption and a re-stocking cycle in China."
Copper had traded in positive territory earlier Wednesday, tracking gains in the euro after reports that the International Monetary Fund would seek to boost its lending firepower to stave off a crisis in Europe. Futures later backed off those gains as the euro retreated from its highs.
Dollar-denominated copper can fall as gains in the dollar make the futures more expensive for buyers using other currencies.