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Renewed EU concerns erase copper price gains

By Michael Bellart  (Global Times)

07:28, June 01, 2012

Copper futures closed at a new year-to-date low Thursday as the eurozone's troubles weighed on international prices, capping off the worst month for domestic commodities of 2012.

The most traded copper contract on the Shanghai Futures Exchange (SHFE) lost 1.23 percent to close at 54,530 yuan ($8,562.19) per ton. The contract fell as low as 54,280 yuan per ton Thursday - its lowest level since December 29. The contract was down about 6.7 percent for the month.

The September contract opened 1.75 percent below Wednesday's closing price, tracking the benchmark three-month copper contract on the London Metal Exchange (LME) overnight. The contract fell about 2 percent Thursday, giving back all of this year's gains. It was trading at $7,484 per ton when the Chinese mainland markets closed, down 0.33 percent for the day.

Both contracts had more or less stabilized in Asian trading Thursday, following the previous day's losses.

Several factors sparked Thursday's sell-off, according to Natalie Robertson, a commodity analyst for the bank ANZ. The factors included unresolved questions about Spain's bank recapitalization, an Italian government bond issuance that missed its maximum target and new opinion polls in Greece showing less support for pro-bailout, pro-austerity parties than before, Robertson wrote Thursday.

The yield on Spain's 10 year government bond rose above 6.7 percent Thursday, edging closer to the 7 percent threshold, at which government borrowing is no longer considered sustainable.

In response to a falling euro, the US dollar continued to strengthen - another sign investors were fleeing to safety. The US Dollar Index, which gauges the value of the dollar against a basket of currencies, rose 0.45 percent in the 24 hours preceding the domestic market's close.

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