Gloomy Global Data Snaps Copper's Winning Streak

May 02, 2012 NEW YORK (Dow Jones)--Copper futures fell on Wednesday, snapping a streak of six sessions of gains, as gloomy global economic data hit the demand outlook for the industrial metal.

The most actively traded copper contract, for July delivery, fell 5.65 cents, or 1.5%, to settle at $3.787 a pound on the Comex division of the New York Mercantile Exchange.

Manufacturing activity in China and the euro zone contracted in April, according to separate reports released Wednesday, potentially pointing to lower-than-expected copper use from the world's top two consumers. China is the largest user of the metal, accounting for about 40% of global consumption, followed by the euro-area countries.

In China, HSBC's index of manufacturing showed the pace of contraction in the sector slowed in April from March's level, but still showed shrinking activity. Copper prices tend to react strongly to indicators of global manufacturing, as well as general market sentiment, because of the metal's widespread uses across industries.

Metals markets "are still troubled by what is going on in China," said Edward Meir, an analyst with INTL FCStone, in a note. "With the global growth outlook still very patchy, it is hard to get too excited about upside prospects in most commodities, base metals included."

Economic reports from the U.S. also weighed on sentiment in the copper market. Private-sector businesses added much fewer jobs than expected last month, according to data from Automatic Data Processing Inc. and consultancy Macroeconomic Advisers, potentially foreshadowing further disappointment when the government releases its monthly unemployment report on Friday.

In response to Wednesday's weak data, the U.S. Dollar climbed against the euro and other major currencies, weighing on copper prices by making the futures more expensive for buyers using other currencies. The ICE US Dollar Index on Wednesday touched a one-week high.

Copper futures had settled at a four-week high on Tuesday as traders bet that signs of a tight physical market for the metal and an upbeat reading on U.S. manufacturing outweighed economic uncertainty elsewhere. Copper's gains this week came on low volume, with many trading desks in Europe and China thinly staffed for the May 1 holidays.

Copper settlements (ranges include electronic and pit trading):
May  $3.7855; down 5.45 cents; Range $3.7655-$3.8300
July $3.7870; down 5.65 cents; Range $3.7665-$3.8395