MSN:Copper steady ahead of uncertain Greek election
LONDON (Reuters) - Copper was steady on Thursday as most investors were unwilling to take positions ahead of the outcome of Sunday's Greek election, critical to the euro zone crisis which has shaken markets and hit metals demand in the last year.
Fears of a deeper than previously expected economic slowdown in top consumer China were also balanced by expectations that the Chinese government will react to contraction with stimulus to revive growth.
Benchmark copper on the London Metal Exchange (LME) was trading at $7,399.25 by 0654 EDT, little changed from a close of $7,390 on Wednesday.
"The Greek elections are definitely a focus of market players and no one wants to be positioned ahead of these elections as the outcome is so uncertain," Daniel Briesemann, an analyst at Commerzbank, said.
Greece goes to the polls on Sunday in a vote that could determine the nation's future in the euro zone.
Adding to concerns about the troubled euro zone, Credit ratings agency Moody's Investors Service cut its rating on Spanish government debt on Wednesday by three notches to Baa3 from A3, saying the newly approved euro zone plan to help Spain's banks will increase the country's debt burden.
Italy sold 4.5 billion euros of government bonds, including 3 billion euros of three-year bonds, meeting decent demand despite the deepening euro zone debt crisis.
Many however believe that Italy would be the next in line for a bailout should Spain have to ask for one.
Weighing on metals, the euro turned lower on the day against the dollar after benchmark 10-year Spanish government bond yields rose to hit 7 percent, a level deemed too expensive for a sovereign to continue borrowing cash over the long term.
A stronger U.S. currency against the euro and other currencies makes dollar-prices commodities costlier for foreign investors.
CONTRACTION VS STIMULUS
China's May copper imports unexpectedly climbed 11.7 percent data showed this week, an indication, according to some, that demand could be stronger in the near term following the recent price slump.
"There was strong import data from China of late but the enthusiasm in the market went very quickly," Briesemann said.
Hopes of improved demand from recent stimulus programs introduced by top metals consumer China were also balanced by worries over weaker than expected Chinese and U.S. growth.
"The market is pretty divided today. Some fresh longs came in on anticipation that the Chinese government's recent spending policies would spur copper demand soon," said Orient Futures derivatives director Andy Du.
"But there are also short-coverers today who have exited the market just in case more bad news on the global economy pushes prices down."
Markets took a bearish turn on Wednesday after data showed U.S. retail sales fell for a second straight month in May and wholesale prices dropped by the most in three years. This added to a raft of other indicators, including employment and manufacturing, that have highlighted a slowdown in the country's economic recovery.
Investors will now look at U.S. job data later on Thursday for further clues on the state of the world's largest economy.
In other metals tin was at $19,425 from $19,450 while zinc, used to galvanize steel, was at $1,885.75 from a last bid of $1,882 on Wednesday.
Battery material lead was at $1,900.25 from $1,899 and aluminum was at $1,969 from $1,964.
