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Metal futures unphased by Greek election outcome

By Michael Bellart (Global Times)

08:19, June 19, 2012

Domestic metal futures were steady Monday after Greek voters elected a pro-bailout coalition Sunday, easing concerns that the country might be forced to abandon the euro.

The most active copper contract on the Shanghai Futures Exchange (SHFE) tacked on 0.16 percent to end at 54,960 yuan ($8,645.21) per ton. The contract opened 0.27 percent higher and slipped lower over the day.

The benchmark three-month copper contract on the London Metal Exchange (LME) was trading at $7,564 per ton after the Chinese mainland markets closed Monday, up a sliver of a percentage point for the day.

Domestic commodity futures clung close to even Monday following the Greek vote, which gave the pro-bailout parties New Democracy and PASOK enough votes to form a coalition government, Reuters reported Monday.

Market watchers had worried that a victory for anti-bailout parties might lead the indebted country to leave the currency union, causing contagion to spread across the eurozone as investors pulled their money out of assets in peripheral EU countries like Spain and Italy. Many thought the resulting financial turmoil might have crushed demand for industrial metals like copper.

Nonetheless, any sense of relief from the long-awaited vote was brief Monday as the market for industrial metals, copper in particular, has significant problems, especially in China.

"Whenever we get a respite from macroeconomics, we turn to fundamentals and worry about sluggish Chinese copper demand. But these rallies do give investors some shorting opportunities," Orient Futures derivatives director Andy Du told Reuters Monday.

The market's attention will likely turn to the Group of 20 (G20) nations and the US Federal Reserve's Federal Open Market Committee meetings later this week. Despite comments from the Fed, some traders continue to speculate the central bank might undertake further monetary stimulus, especially following last month's weak jobs numbers.

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