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METALS-Copper closes in on 2012 low as euro debt fears bite
May 30, 2012 / 9:53 AM / in 6 years

METALS-Copper closes in on 2012 low as euro debt fears bite

* Copper prices turn negative for year
    * Hopes dashed Beijing considering stimulus package
    * Coming up: U.S. weekly jobless claims Thurs.

    By Chris Kelly and Harpreet Bhal	
    NEW YORK/LONDON, May 30 (Reuters) - London copper fell more than 2 percent
o n W ednesday, turning negative for the year and coming within $20 of its 2012
low on fears of a widening European debt crisis and fading hopes for a Chinese
stimulus.	
    Copper plunged alongside other economically sensitive raw materials like
crude oil, which slid to a fresh 2012 trough on a worrisome petroleum demand
outlook centered around Europe's widening debt crisis including Spain's banking
problems, Italian borrowing costs and upcoming Greek elections. 	
    "I think what the market is beginning to price in and what we are going to
see priced in over the next few weeks is the eventuality of that June 18
deadline, where Greece may very well exit the euro," said Zachary Oxman,
managing director with TrendMax in Encinitas, California.	
    "Greece is really the lynchpin. If Greece goes, then comes Spain. We're
climbing the wall of worry again."	
    London Metal Exchange (LME) benchmark copper touched $7,463 a tonne,
its lowest since hitting a 2012 trough of $7,445 on Jan. 9. It closed down more
than 2 percent at a bid of $7,475 a tonne versus Tuesday's close at $7,670.	
    Further support is seen at $7,445 and $7,368, a Fibonacci retracement point,
traders said.	
    In New York, the COMEX July contract hit its lowest level since late
December at $3.3725 per lb, before ending the day down 7.20 cents, or 2 percent,
at $3.39.	
    Copper prices are now down nearly 2 percent for the year, erasing gains of
more than 12 percent seen in February.	
    "You had comments from China overnight dashing hopes of a major stimulus
program, then you had the Spanish government rebuffed by the ECB in terms of
shoring up Bankia with bonds," analyst Leon Westgate of Standard Bank said.	
    Influential academics said Beijing should shun aggressive fiscal stimulus,
in remarks published in leading state-backed newspapers on Wednesday.	
    Those views joined a chorus of commentary countering market expectations
that China might unveil a stimulus package similar to the 4 trillion yuan
($630.1 billion) in spending unleashed during the global financial crisis.
 	
    Adding to the concerns, data on Wednesday showed euro zone economic
sentiment fell more than expected in May as pessimism among manufacturers and
retailers in particular worsened, although consumers became slightly less
downbeat about the economy for the year ahead. 	
    In the U.S., contracts to purchase previously owned U.S. homes unexpectedly
fell in April to a four-month low. 	
    "We are not trading any supply/demand fundamentals. There are concerns about
China and Europe, and the pending home sales numbers were not very good today,"
said Bill O'Neill, partner of LOGIC Advisors in Upper Saddle River, New Jersey.	
    "There are lots of growth concerns, and that's keeping copper on the
defensive today."	
    Giving brief respite to markets, the European Commission said on Wednesday
the euro zone should move to a banking union and consider directly
recapitalising banks from its permanent bailout fund. 	
    	
    	
    	
    CHINA INFRASTRUCTURE EYED 	
    Investors are keeping a close eye on Beijing's vows to support the economy
after authorities last week approved a list of infrastructure investments.
   	
    The world's largest copper consumer, accounting for 40 percent of global
refined copper consumption last year, will allocate an annual fund of up to 2
billion yuan ($315 million) from this year to help develop and mass produce
energy-saving vehicles to cut carbon emissions, the government said.
 	
    "Although the policy actions look exactly like the ones adopted nearly four
years ago, they are not a big stimulus package. The projects were planned under
the Five-Year Program, spending is more modest, and the projects and industries
were chosen more selectively," Barclays analyst Yiping Huang said in a research
note.  	
    Some traders said they would adopt a wait-and-see stance until there was
evidence that demand was picking up in downstream industries.  	
    "Major copper buyers in China recently told us their order books are still
very weak. This will be a factor weighing on prices at least in the short- to
medium-term," a Shanghai-based trader said. 	
    In other metals, tin fell $430 to end at $19,770 a tonne.  	
    Reflecting tightness in immediate supply, the premium for cash tin to
three-months material jumped to $12, from a discount earlier this
week.	
	
 Metal Prices at 1750 GMT
                                                                  
  Metal            Last      Change  Pct Move   End 2011   Ytd Pct
                                                              move
  COMEX Cu       339.20       -7.00     -2.02     343.60     -1.28
  LME Alum      2007.00      -15.00     -0.74    2020.00     -0.64
  LME Cu        7475.00     -195.00     -2.54    7600.00     -1.64
  LME Lead      1920.00      -28.00     -1.44    2035.00     -5.65
  LME Nickel   16300.00     -350.00     -2.10   18710.00    -12.88
  LME Tin      19765.00     -435.00     -2.15   19200.00      2.94
  LME Zinc      1893.00      -21.00     -1.10    1845.00      2.60
  SHFE Alu     15980.00      -50.00     -0.31   15845.00      0.85
  SHFE Cu*     55510.00     -750.00     -1.33   55360.00      0.27
  SHFE Zin     14870.00     -105.00     -0.70   14795.00      0.51
 ** Benchmark month for COMEX copper
 * 3rd contract month for SHFE AL, CU and ZN
 SHFE ZN began trading on 26/3/07

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