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EU debt jitters send China commodity prices down

(Global Times)

13:30, November 01, 2011

Commodities prices on China's futures exchanges fell Monday as an unexpected rise in Italian bonds yields Friday shattered confidence that EU leaders had put a lid on the region's sovereign debt crisis.

The sell-off capped a month that saw a recovery in copper, gold and soybean futures, but a decline in steel and grains.

The most active copper contract on the Shanghai Futures Exchange (SHFE), for January delivery, lost 2.3 percent Monday to settle at 58,400 yuan ($9,191.81) per ton.

The three-month copper contract on the London Metal Exchange (LME) was trading down 2.7 percent when the SHFE closed. The SHFE contract surged 9.2 percent for the month.

The yield on 10-year Italian government bonds jumped above 6 percent Friday, a record high, as investors fled the market on concerns of whether the country would be able to pay back its debt, Reuters reported.

The move pushed up the value of the US dollar and pulled down commodities prices, which had rallied over most of last week. The US Dollar Index, which measures the value of the dollar against a basket of currencies, was trading 1.25 percent higher at 76.03 when the SHFE closed Monday. A stronger dollar makes dollar-denominated commodities more expensive for buyers using other currencies.

The dollar strengthened after Japan unilaterally intervened to weaken its currency, which undermined global gold prices.

The most active SHFE gold contract, for December delivery, declined 1.6 percent to settle at 353.68 yuan per gram. The contract rose 4.7 percent last month. Global bullion prices had fallen 1.6 percent as of 3 pm Beijing Time.

In other commodities, the No.1 soybean contract for September delivery fell 1.3 percent to settle at 4,405 yuan per ton. The contract was up 3.4 percent in October.

SHFE steel rebar contracts were among the month's biggest losers after global iron ore prices collapsed last week, forcing down China's benchmark steel futures contract.

Steel rebar for January delivery fell 4.6 percent in October to settle at 4,118 yuan per ton.

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