Jul 25, 2012 (Dow Jones) NEW YORK--Copper futures rose modestly Wednesday, as gains posted on hopes of new monetary easing were trimmed after a report on U.S. new-home sales came in weaker than expected.
The most actively traded contract, for September delivery, rose 2.15 cents, or 0.6%, to settle at $3.3745 a pound on the Comex division of the New York Mercantile Exchange.
Sales of newly built homes in the U.S. fell 8.4% in June from May, to a seasonally adjusted annual rate of 350,000, the lowest level in five months. The data show the real-estate market continues to struggle toward recovery.
Copper prices retreated from intraday highs on the report. Copper is used to make electrical wiring and plumbing, two products in high demand by residential construction.
"Even though house prices are lower and mortgage rates attractive, pent-up demand remains stymied by fears over job security," traders at Sucden Financial said in a note to clients.
Earlier in the day, copper prices had climbed to a high of $3.4040 a pound as anticipation of economic stimulus unleashed a wave of buyers. Some of these market participants came to repurchase previously sold positions, Sucden said.
European Central Bank Governing Council member Ewald Nowotny said the euro zone's proposed permanent bailout fund should be given a banking license. The move would let the fund access the ECB's cheap lending rates and make large bond purchases, creating a mechanism similar to the Federal Reserve's quantitative-easing programs.
Tuesday afternoon, The Wall Street Journal reported the Fed's decision makers were a step closer to implementing new stimulus measures aimed at supporting U.S. economic growth.
Copper prices are sensitive to shifts in the economic outlook because the metal is used in general manufacturing, construction, automotive production and electronics. An uptick in economic growth would translate into greater demand for the raw material, and a potential increase in price.
Elsewhere, Hong Kong Exchanges and Clearing Ltd. (0388.HK) secured approval from London Metal Exchange shareholders to acquire the world's largest metals-trading exchange. The company's all-cash offer, valued at 1.388 billion pounds ($2.15 billion), received approval from shareholders representing 99.63% of LME shares, the LME said.
Copper settlements (ranges include electronic and pit trading):
July $3.3750; up 2.20 cents; Range $3.3615-$3.3970
September $3.3745; up 2.15 cents; Range $3.3320-$3.4040