Investing.com - Copper futures came under heavy selling pressure during European morning trade on Monday, falling to the lowest level since mid-January as growing fears over the possibility of a Greek exit from the euro zone prompted investors to pare back their exposure to growth-linked assets.
On the Comex division of the New York Mercantile Exchange, copper futures for July delivery traded at USD3.550 a pound during European morning trade, tumbling 2.65%.
It earlier fell by as much as 2.75% to trade at USD3.548 a pound, the lowest since January 12.
Copper’s losses accelerated after Spain saw borrowing costs rise sharply at an auction of short-term debt earlier in the day. The yield on the country’s 10-year bonds hit 6.28%, amid investor concerns that the euro zone’s debt crisis could spread from Greece.
Market sentiment was already on the back foot as investors continued to monitor political developments in Greece, as the debt-laden country struggles to form a coalition government following last weekend’s elections.
Parties have been unable to reach an agreement over whether Greece should continue to implement unpopular austerity measures demanded by the country’s international creditors in exchange for its EUR130 billion bailout agreement.
Greece’s President Karolos Papoulias is set to launch a final attempt on Monday to form a coalition government, but will have to call another election if he fails to do so by Thursday, fanning fears over a potential Greek default and eventual exit from the euro zone.
Europe as a region is second in global demand for the industrial metal. Prices have tracked investor sentiment toward the euro zone’s debt crisis in recent months.
The heightened sense of risk aversion prompted investors to shun riskier assets, such as stocks and industrial commodities, and flock to the relative safety of the U.S. dollar.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.4% to trade at 80.75, the highest since March 15.
Fears over a deeper-than-expected slowdown in China also added to the selling pressure, after a flurry of data released late last week indicated that the world's second-largest economy was slowing faster than expected.
Copper traders shrugged off a policy easing move by the China’s central bank over the weekend.
The People’s Bank of China cut the Reserve Requirement Ratio, or the amount of cash that banks must hold as reserves, to 20.0% from 20.5%, effective May 18. It was the third cut in six months.
A deeper slowdown in China, the world’s second-biggest economy, would impair a global expansion that is already faltering because of Europe’s austerity measures.
China is the world’s largest copper consumer, accounting for almost 40% of world consumption last year.
Elsewhere on the Comex, gold for June delivery tumbled 1.5% to trade at USD1,559.95 a troy ounce, the lowest since January 3, while silver for July delivery plunged 2.1% to trade at USD28.27 a troy ounce, also the lowest since January 3.
On the Comex division of the New York Mercantile Exchange, copper futures for July delivery traded at USD3.550 a pound during European morning trade, tumbling 2.65%.
It earlier fell by as much as 2.75% to trade at USD3.548 a pound, the lowest since January 12.
Copper’s losses accelerated after Spain saw borrowing costs rise sharply at an auction of short-term debt earlier in the day. The yield on the country’s 10-year bonds hit 6.28%, amid investor concerns that the euro zone’s debt crisis could spread from Greece.
Market sentiment was already on the back foot as investors continued to monitor political developments in Greece, as the debt-laden country struggles to form a coalition government following last weekend’s elections.
Parties have been unable to reach an agreement over whether Greece should continue to implement unpopular austerity measures demanded by the country’s international creditors in exchange for its EUR130 billion bailout agreement.
Greece’s President Karolos Papoulias is set to launch a final attempt on Monday to form a coalition government, but will have to call another election if he fails to do so by Thursday, fanning fears over a potential Greek default and eventual exit from the euro zone.
Europe as a region is second in global demand for the industrial metal. Prices have tracked investor sentiment toward the euro zone’s debt crisis in recent months.
The heightened sense of risk aversion prompted investors to shun riskier assets, such as stocks and industrial commodities, and flock to the relative safety of the U.S. dollar.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.4% to trade at 80.75, the highest since March 15.
Fears over a deeper-than-expected slowdown in China also added to the selling pressure, after a flurry of data released late last week indicated that the world's second-largest economy was slowing faster than expected.
Copper traders shrugged off a policy easing move by the China’s central bank over the weekend.
The People’s Bank of China cut the Reserve Requirement Ratio, or the amount of cash that banks must hold as reserves, to 20.0% from 20.5%, effective May 18. It was the third cut in six months.
A deeper slowdown in China, the world’s second-biggest economy, would impair a global expansion that is already faltering because of Europe’s austerity measures.
China is the world’s largest copper consumer, accounting for almost 40% of world consumption last year.
Elsewhere on the Comex, gold for June delivery tumbled 1.5% to trade at USD1,559.95 a troy ounce, the lowest since January 3, while silver for July delivery plunged 2.1% to trade at USD28.27 a troy ounce, also the lowest since January 3.