Jun 26, 2012 (Dow Jones) NEW YORK--Copper futures slipped Tuesday, ending just short of the unchanged mark as continued unease about Europe's banking crisis made potential buyers of the growth-sensitive metal cautious.
The most actively traded copper contract, for July delivery, fell 0.30 cent, or 0.1%, to settle at $3.313 a pound on the Comex division of the New York Mercantile Exchange.
Spain paid its highest borrowing costs in 2012 on three-month and six-month government bonds Tuesday after 28 Spanish banks were downgraded by Moody's Investors Service the day before. Investors are worried that the 100 billion euro ($125 billion) promised by euro-zone ministers to bail out Spanish banks may not be sufficient for the needs of the euro zone's fourth-largest economy.
Copper, an industrial metal widely used in construction and manufacturing, is vulnerable to changes in economic conditions. Copper trading was quiet Tuesday, with prices showing little decisive direction, as investors wait for further cues from Europe, said Standard Bank's Leon Westgate, in a note.
"Copper turnover has itself been admittedly rather lackluster...with the market continuing to sit back and watch developments elsewhere," Mr. Westgate said.
Investors remain skeptical that Thursday's European Union summit will produce a regional consensus. Italy also saw its bond yields rise Tuesday, and on Monday, Cyprus became the fifth euro-zone country to ask for bailout assistance.
While traders continue "to look to the U.S. recovery and Chinese demand as a beacon of hope, fresh problems in Europe are obviously still hampering sentiment," RBC Capital Markets said in a note.
Analysts say copper demand from consumers in China has picked up recently. The U.S. economy, the world's No. 2 copper consumer behind China, had a hot start to the year, before appearing to slow in recent months.
Copper prices initially retreated after a report that U.S. consumers' mood toward the economy soured in June for a fourth consecutive month. The Conference Board's preliminary reading on consumer confidence for June slipped to 62, from 64.4 in May. Economists had expected a reading of 63.
A separate report showed economic activity among central-Atlantic manufacturers contracted in June.
Copper futures later pared their losses after the euro rebounded against the U.S. dollar. A falling U.S. currency can boost dollar-denominated copper futures by making them appear cheaper for buyers using other currencies.
Copper settlements (ranges include electronic and pit trading):
Jun $3.3155; up 0.15 cent; Range $3.2975-$3.3155
Jul $3.3130; down 0.30 cent; Range $3.2950-$3.3355