Forexpros - Copper futures came under heavy selling pressure during European morning trade on Thursday, falling to a one-week low following a raft of data showing more gloom about the global economy. Disappointment over the lack of aggressive monetary stimulus from the Federal Reserve further weighed, as investors continued to focus on developments in the euro zone. On the Comex division of the New York Mercantile Exchange, copper futures for July delivery traded at USD3.344 a pound during European morning trade, tumbling 1.3%. It earlier fell by as much as 1.75% to trade at USD3.333 a pound, the lowest since June 14. Copper’s losses accelerated after data showed that China’s HSBC Flash Purchasing Managers Index, the earliest indicator of the country's industrial activity, declined to a seven-month low of 48.1 in June from a final reading of 48.4 in May, as export orders remained firmly in contraction. The data remained below the 50.0-mark for the eighth consecutive month, adding to concerns over a deepening slowdown in the world’s second largest economy. China is the world’s largest copper consumer, accounting for almost 40% of world consumption last year. A deeper slowdown in China, the world’s second biggest economy, would impair a global expansion that is already faltering because of the euro zone’s ongoing sovereign debt crisis. Crude prices came under additional pressure after a report showed that manufacturing activity in Germany slowed to the lowest level in three years in June, renewing concerns over the impact of the euro zone’s sovereign debt crisis on the region’s largest economy. Meanwhile, Spain saw borrowing costs rise at a well-received auction of two-, three- and five-year government bonds earlier in the day, as uncertainty over whether Madrid will need a full sovereign bailout persisted. Investors remained cautious ahead to the outcome of an audit of Spanish banks later in the day, amid concerns that the results could show that a EUR100 billion bailout for the country’s banks agreed earlier this month would not be large enough. 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. Copper prices were already on the back foot after the Fed announced Wednesday that it was extending its current bond buying program, known as "Operation Twist", until the end of the year and said that it was ready to take additional steps. The bond purchasing program had been due to expire at the end of this month. Under Operation Twist, the Fed sells short-dated Treasury instruments and buys longer-dated Treasury’s in tandem with the aim of pushing down long-term interest rates. The announcement disappointed market expectations for more aggressive measures to shore up growth in the world’s largest economy, following a recent string of weak U.S. data. Sentiment was also dampened after Fed officials lowered their estimates for economic growth, citing a weak jobs market and a depressed housing sector. Copper is sensitive to the global economic outlook because of its widespread uses in construction and manufacturing. Copper prices have been on a rapid decline since the start of May, losing nearly 12% amid growing fears over an escalating debt crisis in the euro zone and a deeper-than-expected slowdown in China. A deeper slowdown in China, the world’s second biggest economy, would impair a global expansion that is already faltering because of debt crisis in the euro zone. Elsewhere on the Comex, gold for August delivery dropped 1.05% to trade at USD1,598.75 a troy ounce, while silver for July delivery tumbled 1.85% to trade at USD27.86 a troy ounce.

Source