Copper sags to 3-month low, China worries weigh
SHANGHAI (Reuters) - Copper fell further below $8,000 a metric tonne to hit fresh three-month lows on Monday, pressured by growing concern about slower demand from top consumer China, with Shanghai prices sliding more than 2 percent.
A stronger dollar also weighed on the metal, as rising Spanish bond yields which revived worries over the debt-plagued euro zone, dragged down the euro to one-month lows.
Three-month copper on the London Metal Exchange fell as low as $7,885.25 a metric tonne, a level not seen since January 13. By 1:47 a.m. Eastern Time, it was down 1.2 percent at $7,894.25, adding to a 2.8 percent slide on Friday, when the Chinese data was released.
The data, which showed the Chinese economy growing an annual 8.1 percent in the first quarter, its weakest pace in nearly three years, fuelled a rash of selling, said Jonathan Barratt, chief executive of BarrattBulletin, a Sydney-based commodity research firm.
"We have broken through some pretty heavy support levels in copper. When this happens, you'll see some funds selling," Barratt said.
Copper was up as much as 15 percent this year when it hit a high of $8,765 in February as investors banked on firm Chinese demand and tight global supplies.
That year-to-date gain has thinned to less than 4 percent on Monday.
LME's losses spread to Shanghai. The most-active July copper contract on the Shanghai Futures Exchange fell 2.3 percent to 56,700 yuan ($9,000) a tonne, not far off the session trough of 56,650 yuan, its weakest since January 11.
So concerned were market players about the shaky global economic outlook that they shrugged off China's weekend move to let the yuan trade more freely against the dollar, which economists say suggests Beijing is optimistic the economy is strong enough to withstand currency movements.
"Investors are not outright pessimistic but just wary. This will cause copper prices to fluctuate in the near term, while they try to eke out new technical ranges," said Orient Futures derivatives director Andy Du.
Soaring bond yields in Spain added to the gloom. Spain's banks increased their reliance on cheap loans from the European Central Bank in March, borrowing almost double what they did in February.
The dollar rose to its highest in a month versus the euro as Spain's soaring bond yields rekindled worries about the fragile state of the euro zone's economy, sending Asian shares lower too. <USD/> <MKTS/GLOB>
Spain's government bond yields rose and the cost of insuring its debt hit an all-time high on Friday, as record borrowing by its banks from the European Central Bank highlighted fears about the country's finances before it tests market appetite for its debt on Thursday.
($1 = 6.3030 Chinese yuan)
(Editing by Manolo Serapio Jr.)
- Tweet this
- Share this
- Digg this
DAVOS, Switzerland - Central banks have done their best to rescue the world economy by printing money and politicians must now act fast to enact structural reforms and pro-investment policies to boost growth, central bankers said on Saturday.
Trending On Reuters
India's largest carmaker Maruti Suzuki India Ltd posted a smaller-than-expected rise in profit for the third quarter, hit by one-off items including a jump in advertising costs, a higher tax rate and lower income from investments. Full Article | Full coverage