Jun 08, 2012 (Dow Jones) NEW YORK--Copper futures settled at a fresh 2012 low Friday as Europe's ongoing struggle with debt overshadowed China's recent decision to cut interest rates.
The most-actively traded contract, for July delivery, fell 8.55 cents, or 2.5%, to settle at $3.2850 a pound on the Comex division of the New York Mercantile Exchange. This was the lowest settlement price since Dec. 15.
Euro-zone concerns dominated market attention Friday, with copper setting a fresh 2012 intraday low of $3.2635 a pound on reports that Spain may ask the European Union for aid to bolster its banking system.
Spain's deputy prime minister cooled such speculation, telling reporters at a press conference that the government won't request any help for its banks until the International Monetary Fund and external auditors present their assessments on capital needs.
Copper futures pared their sharpest losses, however, after President Barack Obama said the euro zone can take specific steps to solve its debt crisis, such as recapitalizing its banks in order to stabilize the financial system.
Copper's sharp downturn came on the heels of modest losses Thursday, as China's decision to cut interest rates offset concerns that Federal Reserve Chairman Ben Bernanke avoiding indicating that new stimulus measures were imminent. China is the world's top consumer of the industrial metal, accounting for about 40% of global copper demand.
"With China cutting interest rates, I'm really surprised copper is not up today," said Jimmy Tintle, a market analyst with GreenKey Alternative Asset Services. "You'd think people would want to start building over there, which means they have to buy copper, but it really hasn't followed through. Maybe they're just sitting and looking at Europe."
Copper has widespread applications in automotive production, general manufacturing and construction. Demand for the industrial metal is sensitive to shifts in economic growth, making copper a useful gauge of the global economy.
Copper prices faced additional pressure from a stronger dollar Friday. The U.S. currency rallied against a basket of international currencies, with the ICE Dollar Index recently trading up 0.4% at 82.568.
Copper is priced in dollars, and investors who use other currencies tend to cut back their purchases as the dollar rallies because the contracts become more expensive for these market participants.
Copper settlements (ranges include electronic and pit trading):
Jun $3.2835; down 8.60 cents; Range $3.2735-$3.3235
Jul $3.2850; down 8.55 cents; Range $3.2635-$3.3685