Mar 28, 2012 NEW YORK (Dow Jones)--Copper futures sank 2.3% Wednesday as some investors chose to cut back their holdings on weak economic data and a stronger dollar.
The most actively traded contract, for May delivery, fell 8.75 cents, or 2.3%, to settle at $3.7925 a pound on the Comex division of the New York Mercantile Exchange.
Copper traders were disappointed to see U.S. durable-goods orders for February come in below market expectations. Manufacturers' orders for goods designed to last three years or more rose 2.2% last month, missing forecasts of a 3% increase.
Signs the economy is weaker than previously thought tend to erode market sentiment and weigh on copper prices as investors cut back their holdings on worries future demand for the metal used in electrical wires and computer chips will sag.
"I think you have a risk-off trade across the board today," said Matt Zeman, head of trading at Kingsview Financial. "We're seeing a stronger dollar, stronger Treasuries, weaker commodities."
The dollar climbed against other currencies, pressuring dollar-denominated copper futures by making the contracts seem more expensive to buyers using other currencies.
Data showed the U.K. economy shrank more than previously thought in the final three months of 2011. Gross domestic product, the broadest measure of goods and services produced by the economy, contracted by 0.3% in the fourth quarter, according to the third and final estimate by the Office for National Statistics.
Copper futures had traded just shy of $3.90 in recent days, but weak data have tipped investor sentiment to the downside.
"Momentum indicators have turned, suggesting the red metal may now test support at the bottom end of its recent range," said traders at RBC Capital Markets.
Copper settlements (ranges include electronic and pit trading):
Mar $3.7870; down 9.20 cents; Range $3.7870-$3.8655
May $3.7925; down 8.75 cents; Range $3.7825-$3.8700