Base metals trading sideways with negative bias during the mid morning on Tuesday, 6th December as the S&P rating agency's warning that it may downgrade euro zone countries citing the European Union summit slated for Friday and policy decisions due out from the European Central Bank and the Bank of England. In addition, Asian Development Bank warning that Asia faces much greater downside risks compared with a few months ago further worsened the investor's sentiment.
Comex Copper future for most active March contract was trading at $3.555 a pound, down by 1.67% (6 cents). SHFE copper future for the most active February contract was trading at 57680 yuan per tonne, down 0.65% (380 yuan). Likewise at MCX, Copper for delivery in February drooping by 1.02% or Rs. 4.2 at Rs. 407.65 per kg with its high at Rs. 410.9 per kg and low at Rs. 405.3 per kg.
Metals retreated form the last weeks gains by the S&P warning that said it had told 15 of the 17 euro zone countries, including Germany, France and four others with top AAA credit rating and might downgrade them within 90 days, if EU leaders fail to reach an agreement on how to solve the region's debt crisis in a summit on Friday.
Even though French President Nicolas Sarkozy and German Chancellor Angela Merkel agreed on a master plan involving treaty change that would include automatic penalties for governments that fail to keep their deficits under control and an early launch of a permanent bailout fund for euro states in distress brought in some optimistic tone but could not sustain to the rally latching onto the summit on Friday this week.
Investors were further unnerved that the collapse at the summit on Dec 9th could lead to a severe recession in Europe and trigger economic ramifications across the globe.
The dollar index buoyed by 0.1% at 78.65 against the basket of 6 major currencies as the sliding euro citing the warning by S&P to euro zone solaced the dollar.
Other metals in domestic market at MCX, short selling is seen in Lead. Nickel for delivery in December was easing by 1.17% or Rs. 11.1 at Rs. 935.6 per kg. Aluminium was trading flat at Rs. 109.15 per kg and Lead was also trading flat at Rs. 107.4 per kg. MCX Zinc was also plunging by 0.76% or Rs. 0.8 at Rs. 104.15 per kg.
