FX:Copper slumps to 1-month low with China, Spain in focus
Forexpros - Copper futures fell to the lowest level in a month during European morning hours on Monday, as concerns over a deeper-than-expected slowdown in China’s economy added to fears over the outlook for global growth.
Uncertainty over whether Spain will formally request a full-scale sovereign debt bailout also weighed on sentiment.
On the Comex division of the New York Mercantile Exchange, copper futures for December delivery traded at USD3.691 a pound during European morning trade, shedding 0.3%.
Earlier in the day, prices fell by as much as 1.1% to hit a session low of USD3.646 a pound, the weakest level since September 10.
Official data released earlier showed that Chinese consumer prices rose 1.9% in September from the year-ago period, in line with expectations and down from 2.0% in August, while producer price inflation fell 3.6%, also in line with expectations.
The data came after a report over the weekend showed that Chinese exports grew 9.9% on the year in September, above expectations for a 5.5% gain. Imports rose 2.4% from a year earlier, in line with expectations.
Copper traders were now looking ahead to Chinese third quarter growth figures due out on October 18.
Market analysts expect the data to show China's annual growth slowed for a seventh straight quarter in the July-September period to 7.4%, the weakest since the depths of the 2009 global financial crisis.
The Asian nation is the world’s largest copper consumer, accounting for almost 40% of world consumption last year.
Copper is sensitive to the economic growth outlook because of its widespread uses across industries. It is used in the construction of buildings, power generation and transmission and the manufacture of consumer electronics.
Investors were jittery as uncertainty over Spain’s position on formally requesting a bailout from its euro zone partners persisted.
Market players have been anticipating for the past month that the Spanish government would ask for a full-scale sovereign bailout.
A bailout would allow the European Central Bank to step in and buy Spanish sovereign debt, which would result in reduced borrowing costs for the debt-strapped nation.
But Spain has been reluctant to do so because it may come with conditions on its budget.
European Union policymakers will hold a two-day summit in Brussels starting on October 18 to discuss ways to firewall and extinguish the debt crisis as well as Greece's steps towards fiscal recovery.
Elsewhere on the Comex, gold for December delivery declined 0.65% to trade at USD1,747.95 a troy ounce, while silver for December delivery dropped 1.2% to trade at USD33.26 a troy ounce.
