SHANGHAI, Oct. 9 (SMM) – Chinese investors gradually returned to markets Monday following China's National Day holiday, so activity on the financial market became more active than last week. But owing to holidays in the US, security markets and government departments were closed, overall trading sentiment remained low. The World Bank slashed its 2012 GDP growth forecast from 7.6% to 7.2% for East Asia and the Pacific Region, and for China's economic growth forecast from 8.2% to 7.7%, saying that the slowdown in China could get worse and last longer than expected. Besides, the IMF cut China's economic growth to 7.8% for this year and global economic growth for this and next year. Meanwhile, the euro zone finance ministers would hold discussions on Spain's banking crisis and other problems in Luxembourg, while long-lasting worries on the European financial system also weighed down markets. Investors thus were concerned over base metals demand outlook and risk aversion retuned to markets again, pushing the US dollar index higher to 79.711. US equity markets closed down due to capital withdrawal, which also dampened copper prices. As a consequence, LME copper prices extended losses during early US and European trading session, testing a low at USD 8,128/mt. But owing to technical support, LME copper prices pared some of declines at the tail of trading before ending at USD 8,180/mt, and proved more resilient than other base metals.

According to the latest news Tuesday morning, Moody's assigned Aaa rating to the ESM but still gave a negative outlook, and at the same time lowered credit rating for Cyprus while also placing a negative outlook. The IMF cut global GDP growth to 3.3%, and the euro zone's 2012 economic growth to -0.4% while also slashing 2012 GDP growths for both the UK and Japan, which will impose pressures on copper prices trends. Hence, LME copper prices will test support at USD 8,150/mt and move between USD 8,150-8,250/mt during Tuesday's Asian trading session. Chinese A-shares will extend weakness. SHFE copper prices will fluctuate and post weak performance, while SHFE 1301 copper contract will hover in the RMB 58,700-59,500/mt range. Spot copper discounts are estimated between negative RMB 20-150/mt versus SHFE 1210 copper contract.