* Spain sells two- and 10-year bonds, markets unconvinced
* U.S. jobless, home sales and factory activity data disappoints
* China may raise liquidity via open market operations
By Veronica Brown and Maytaal Angel
LONDON, April 19 (Reuters) – Copper dipped on Thursday as risk appetite in
the broader markets remained shaky after Spain’s keenly awaited bond auction
failed to soothe worries over the long-term fiscal outlook and after a slew of
U.S. data raised questions over the strength of recovery there.
U.S. stock markets, a proxy for economic growth prospects, whethered the
storm of poor data though, while the euro was up versus the dollar, making
dollar-priced metals cheaper for European buyers and limiting losses in base
metals.
Three-month copper on the London Metal Exchange traded down 0.13
percent to $8,036 at 1443 GMT, having hit a three-month low at $7,885.25 earlier
this week.
A Spanish debt sale earlier this session saw decent demand for the two- and
10-year paper, but the auction fell short of market expectations – keeping
unease about the single currency area in sharp focus.
Meanwhile, in the U.S. new claims for weekly jobless benefits came in above
forecasts, existing home sales fell unexpectedly last month, while a measure of
factory activity in the mid-Atlantic region was worse than expected.
“Macro sentiment has worsened since the start of the week because of the
numbers, it’s not mass risk aversion but its not perfect. It’s time for copper
to consolidate because it suffered some losses at the start of month,” said VTB
Capital analyst Andrey Kryuchenkov.
Hopes for more Chinese monetary easing were stirred by a report by China’s
official Xinhua news agency that the country may increase liquidity via open
market operations and a cut in banks’ required reserves to steer the economy to
a soft landing.
But with copper warehouse stocks still at high levels in China, sentiment
would still be fairly soft, analysts said, until concrete signs of demand
emerged.
“As long as stockpiles remain high in China, copper consumers will continue
to stay away even if prices slip. It’s not a matter of price levels now, but a
matter of confidence. We need something to boost morale – be it news of the
economy picking up, or of stockpiles going down,” said CIFCO analyst Zhou Jie.
On a positive note, the head of the International Monetary Fund said member
countries had committed $316 billion toward new IMF resources to help contain
the debt crisis in the euro zone.
But lingering fears over a slowing global economy remain, as data showed
Spain’s banks continued to battle sliding house prices and a looming recession.
Bad loans rose to their highest level since October 1994 in February, to stand
at 8.2 percent of their credit portfolios.
In market structure, pressure remained for holders of short positions for
April delivery. Cash copper was last seen at an $88-a-tonne premium to the
three-month contract by the close of business on Wednesday.
“The backwardation has eased but does not appear to have gone away as there
is still tightness right through to April 27. It seems that the short positions
have been rolled over to nearby dates,” said one LME trader.
“Since the backwardation is due to certain parties holding a dominant long
position on the LME and not due to an actual pickup in real demand, I think the
squeeze will persist into May,” a Singapore-based trader said.
In other metals, aluminium was steady at $2,059.75 a tonne, while
tin was up slightly at $21,184. Zinc was at $1,998.50, up 0.33
percent.
Battery material lead was last at $2,064.25 from $2,045 , while
nickel rose to $17,785.
Metal Prices at 1445 GMT
Comex copper in cents/lb, LME prices in $/T and SHFE prices in yuan/T
Metal Last Change Pct Move End 2009 Ytd Pct
move
COMEX Cu 363.30 0.20 +0.06 334.65 8.56
LME Alum 2052.00 -7.00 -0.34 2230.00 -7.98
LME Cu 0.00 -8050.00 -100.00 7375.00 -100.00
LME Lead 2060.00 15.00 +0.73 2432.00 -15.30
LME Nickel 17700.00 70.00 +0.40 18525.00 -4.45
LME Tin 21025.00 25.00 +0.12 16950.00 24.04
LME Zinc 0.00 -1992.00 -100.00 2560.00 -100.00
SHFE Alu 16075.00 -35.00 -0.22 17160.00 -6.32
SHFE Cu* 57670.00 -150.00 -0.26 59900.00 -3.72
SHFE Zin 15470.00 -65.00 -0.42 21195.00 -27.01
** Benchmark month for COMEX copper
* 3rd contract month for SHFE AL, CU and ZN
SHFE ZN began trading on 26/3/07
