Forexpros - Copper futures trimmed gains on Thursday, coming off the highest levels of the day after Spain saw borrowing costs rise at a well-received auction of two and ten-year government bonds earlier in the day. On the Comex division of the New York Mercantile Exchange, copper futures for May delivery traded at USD3.646 a pound during European morning trade, adding 0.4%. It earlier rose by as much as 0.85% to trade at a session high USD3.655 a pound. Spain’s Treasury sold EUR1.116 billion worth of two-year government bonds at an average yield of 3.463% earlier in the day, up sharply from 2.069% at a similar auction last month. The country also sold EUR1.425 billion of ten-year debt at an average yield of 5.743%, up from 5.338% at a similar auction last month. It was the highest yield in five months. The results failed to ease concerns over the outlook for Spain, as Prime Minister Mariano Rajoy's government attempts to reduce one of the largest deficits in the euro zone, amid fears that the economy is entering a recession. Bond auctions have become key drivers of risk sentiment in recent months, as traders attempt to gauge the ability of indebted euro zone nations to fund themselves. There have been renewed concerns of further debt contagion in the euro zone in recent weeks amid fears Spain will be the next in the euro zone to require a bailout. In addition, worries over Spain’s troubled banking sector weighed, after the country’s central bank said Wednesday that the amount of bad loans at domestic banks rose to an 18-year high in February. 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. Prices were higher earlier during the Asian trading session after the state-run Xinhua News Agency said that Beijing might cut the reserve ratio requirements for banks to help stimulate the economy, citing an unidentified People’s Bank of China official. The report added to recent market speculation that China will ease monetary policy in then ear-term to ensure a soft landing for the world's second biggest economy. China is the world’s largest copper consumer, accounting for almost 40% of world consumption last year. Data released from the country last week showed that the Chinese economy grew at the slowest pace in almost three years in the first quarter. A deeper slowdown in China would impair a global expansion that is already faltering because of the implementation of harsh austerity measures in Europe. Elsewhere on the Comex, gold for June delivery rose 0.2% to trade at USD1,642.85 a troy ounce, while silver for May delivery gained 0.4% to trade at USD31.60 a troy ounce.

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