Investing.com - Copper futures held on to losses during European morning trade on Wednesday, after Italy saw borrowing costs surge to the highest level since December at an auction of short-term government debt earlier in the day.
Investors also remained cautious ahead of Thursday’s key European Union summit, amid fading hopes for a meaningful result.
On the Comex division of the New York Mercantile Exchange, copper futures for September delivery traded at USD3.310 a pound during European morning trade, shedding 0.35%.
It earlier fell by as much as 0.5% to trade at a daily low of USD3.303 a pound. Prices touched a three-week low of USD3.256 a pound on June 22.
Copper prices held on to losses after Italy’s Treasury sold the full targeted amount of EUR9 billion worth of six-month government bonds at an average yield of 2.957%, the highest since December and up from 2.104% at a similar auction last month.
Demand was steady, with bids exceeding supply 1.615 times versus a "bid-to-cover" ratio of 1.61 in May.
Following the auction the yield on Italian 10-year bonds stood at 6.13%.
Meanwhile, the yield on Spanish 10-year government bonds was at 6.85%, nearing the critical 7% threshold, which is widely viewed as unsustainable in the long term.
Moody’s ratings agency downgraded 28 Spanish banks earlier in the week, after the country formally requested up to EUR100 billion to recapitalize its struggling banking sector.
Market sentiment remained fragile ahead of an EU summit due to begin on Thursday, amid worries the talks will not result in any effective steps to strengthen fiscal integration and allow the euro zone’s rescue funds to buy government debt.
Earlier in the week, German Chancellor Angel Merkel quashed hopes that the euro zone could issue joint euro bonds, saying the idea was "economically wrong" and "counterproductive."
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’s losses were limited amid growing expectations for near-term stimulus from Beijing. According to the state-run China Securities Journal, China may introduce “more proactive” policies to ensure stable growth.
The government may expand infrastructure investment, fine-tune monetary policies and reduce taxes, according to the newspaper.
China is the world’s largest copper consumer, accounting for almost 40% of world consumption last year.
Copper prices have been on a rapid decline since the start of May, losing nearly 14% 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 shed 0.35% to trade at USD1,569.75 a troy ounce, while silver for September delivery declined 0.6% to trade at USD26.93 a troy ounce.
Investors also remained cautious ahead of Thursday’s key European Union summit, amid fading hopes for a meaningful result.
On the Comex division of the New York Mercantile Exchange, copper futures for September delivery traded at USD3.310 a pound during European morning trade, shedding 0.35%.
It earlier fell by as much as 0.5% to trade at a daily low of USD3.303 a pound. Prices touched a three-week low of USD3.256 a pound on June 22.
Copper prices held on to losses after Italy’s Treasury sold the full targeted amount of EUR9 billion worth of six-month government bonds at an average yield of 2.957%, the highest since December and up from 2.104% at a similar auction last month.
Demand was steady, with bids exceeding supply 1.615 times versus a "bid-to-cover" ratio of 1.61 in May.
Following the auction the yield on Italian 10-year bonds stood at 6.13%.
Meanwhile, the yield on Spanish 10-year government bonds was at 6.85%, nearing the critical 7% threshold, which is widely viewed as unsustainable in the long term.
Moody’s ratings agency downgraded 28 Spanish banks earlier in the week, after the country formally requested up to EUR100 billion to recapitalize its struggling banking sector.
Market sentiment remained fragile ahead of an EU summit due to begin on Thursday, amid worries the talks will not result in any effective steps to strengthen fiscal integration and allow the euro zone’s rescue funds to buy government debt.
Earlier in the week, German Chancellor Angel Merkel quashed hopes that the euro zone could issue joint euro bonds, saying the idea was "economically wrong" and "counterproductive."
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’s losses were limited amid growing expectations for near-term stimulus from Beijing. According to the state-run China Securities Journal, China may introduce “more proactive” policies to ensure stable growth.
The government may expand infrastructure investment, fine-tune monetary policies and reduce taxes, according to the newspaper.
China is the world’s largest copper consumer, accounting for almost 40% of world consumption last year.
Copper prices have been on a rapid decline since the start of May, losing nearly 14% 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 shed 0.35% to trade at USD1,569.75 a troy ounce, while silver for September delivery declined 0.6% to trade at USD26.93 a troy ounce.