SHANGHAI, Jun. 29 (SMM) – Market activity on the LME remained muted Thursday. The European summit began Thursday evening still with divergence on how to solve the European debt crisis. Spain's 10-year government bond yields soared through 7% and ignited market worries over the country's financial situation. Besides, Italy's 5 and 10-year government bond yields touched the highest since last December. While Eurozone finance ministers are trying to find the near-term solution to the borrowing costs of Spain and Italy, Germany said it did not want to share other countries' debts, prompting pessimistic investors to take a wait-and-see stance. The euro thus retreated for four trading days in a row and fell to the lowest in over three weeks, weighing down the financial market. Meanwhile, the US initial jobless claims fell last week but were still near a high in recent years, while the Kansas City Fed Manufacturing Index slipped sharply in June. Consumer spending and export growth for 1Q in the US also came in below market anticipations, and failed to give a boost to markets. In consequence, US equity markets dipped, while gold prices fell by 1.8% and crude oil tumbled by 3.1%. LME copper remained weak and tested a low at USD 7,351/mt. However, as there was news at the tail of trading European leaders approved a plan to apply EUR 120 billion to stimulate growth, LME copper stopped falling and gradually narrowed daily losses before finally ending at USD 7,390/mt, a slight drop of USD 30/mt.
Although European leaders reached consensus on the EUR 120 billion pact, many leaders at the summit cast doubts. Furthermore, Spanish and Italian bond yields remain high. In this context, the euro should keep fluctuating before the European summit ends. LME copper thus will move in the previous session's range between USD 7,350-7,440/mt during Friday's Asian trading hours. The Shanghai Composite Index will struggle around 2,200. SHFE copper prices will start down and then lurch, and SHFE 1210 copper contract will hover in the RMB 53,600-54,200/mt range. Spot copper offers are estimated between discounts of negative RMB 30/mt and premiums of positive RMB 50/mt versus SHFE 1207 copper contract.