Copper Slumps On Growth Gloom; Down 3.9% In Week

Jun 01, 2012 NEW YORK (Dow Jones)--A raft of weak global economic data on Friday hit copper-demand expectations, pushing prices of the industrial metal to their lowest point in five months and capping a fifth consecutive weekly decline.

The most actively traded copper contract, for July delivery, fell 5.2 cents, or 1.6%, to settle at $3.3135 a pound on the Comex division of the New York Mercantile Exchange. That's the lowest settlement since Dec. 15. During the week, futures fell 3.9%.

The U.S. economy added much fewer jobs than expected in May, according to a Labor Department report. Employment gains in March and April were revised down, and a separate report showed slowing manufacturing growth in the world's largest economy.

Copper is sensitive to shifts in the economic outlook because of its widespread uses across industries. China and the U.S. are the world's top two consumers of copper.

"Today's numbers confirmed a lot of fears out there," said Bob Haberkorn, a senior commodities broker with RJO Futures. "The U.S. is by no means the safest place on the street right now."

Strength in the U.S. economy this year had supported demand expectations for copper and other industrial metals, helping to make up for fears of a recession in the euro zone as the currency union struggles to contain its debt crisis. The slump in European imports has rattled some Asian markets, deepening fears of a slowdown in China, which alone accounts for roughly 40% of global copper consumption.

Copper pulled back in overnight trading on Friday after the Chinese government's official gauge of nationwide manufacturing showed growth in the sector slowed to a near standstill in May.

Other readings on the global economy were similarly bleak on Friday. The contraction in the euro zone's manufacturing sector accelerated in May, as unemployment hit the highest levels since the formation of the currency union.

Investors next week will be on the lookout for further developments regarding Europe's debt crisis, particularly the International Monetary Fund's reported discussions regarding contingency plans for a possible rescue loan to Spain. The European Central Bank is scheduled to meet to discuss interest rates and policy measures.

"It remains to be seen what happens going into next week, particularly with the European situation," said INTL FCStone analyst Edward Meir. "At this critical stage, perception is more important than reality."

Copper settlements (ranges include electronic and pit trading):
Jun $3.3100; down 5.25 cents; Range $3.3015-$3.3480
Jul $3.3135; down 5.20 cents; Range $3.3000-$3.3775