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Copper futures fall on Greek fears, China demand concerns

Published 02/07/2012, 05:00 AM
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Investing.com - Copper futures were down for a second day on Tuesday, as uncertainty over debt talks between Greece and its private creditors and growing concerns over China's economic growth outlook weighed on the industrial metal.

On the Comex division of the New York Mercantile Exchange, copper futures for March delivery traded at USD3.827 a pound during European morning trade, tumbling 0.97%.

It earlier fell by as much as 1.15% to trade at USD3.821 a pound, the lowest since February 3.

Markets were jittery as Greek Prime Minister Lucas Papademos was to meet with coalition leaders later in the day to discuss the implementation of additional fiscal measures needed to secure a second bailout, after failing to strike a deal on Monday.

European Union officials have said a final agreement on Greece’s EUR130 billion bailout much be approved by February 15, in order to avert a default when a EUR14.5 billion bond repayment comes due on March 20.

Fitch Ratings warned earlier in the day that the euro zone sovereign debt crisis was likely to be prolonged and that severe contagion was likely across Europe if bailout negotiations in Greece fail.

Europe as a region is second after China in global demand for the industrial metal and worries that its ongoing sovereign debt crisis could trigger a broader economic slowdown have kept copper prices under pressure in recent months.

China’s Ministry of Industry and Information Technology said earlier Tuesday that the country’s industrial production growth was likely to slow this quarter, as the global economy cools and Europe’s debt crisis worsens.

The downbeat comments came a day after the International Monetary Fund warned that China's annual economic growth could slow by as much as half from its current forecast for growth of 8.2% in 2012, should Europe's debt crisis tip the world economy into a recession.

Indications of lackluster post-Lunar New Year Holiday copper sales in China added to speculation that demand from the world’s biggest copper consumer was weakening.

Copper is sensitive to the economic growth outlook because of its widespread uses across industries. China is the world’s largest copper consumer, accounting for almost 40% of world consumption last year.

Elsewhere on the Comex, gold for April delivery was largely unchanged to trade at USD1,725.05 a troy ounce, while silver for March delivery fell 0.52% to trade at USD33.57 a troy ounce.

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