Euro zone debt woes back in focus
* Bernanke retracts QE3 hint
* Coming up: U.S. Industrial prod/Capacity use, June; 1315
(Updates prices, adds quotes and details)
By Carrie Ho
SHANGHAI, July 15 (Reuters) – London copper edged down on
Friday, paring early gains, as the dollar steadied with
investors shifting their focus to Europe’s debt woes from
Standard and Poor’s warning that it could cut U.S. credit
Three-month copper on the London Metal Exchange
edged down 0.3 percent to $9,601 a tonne by 0725 GMT.
Prices had climbed to $9,674 earlier in the session as the
dollar briefly came under selling pressure after the S&P’s
warning, but the impact on the greenback was shortlived perhaps
because Moody’s had already raised the possibility of a
Ratings agency S&P’s warned it could cut the triple-A rating
of the U.S. if a deal on raising the government’s debt ceiling
is not reached soon.
The U.S. Treasury has warned that it will run out of money
to pay the country’s bills after Aug. 2 if the $14.3 trillion
borrowing limit is not raised. Failure to seal a deal by then
could cause turmoil in global financial markets and plunge the
U.S. into another recession.
Federal Reserve Chairman Ben Bernanke warned that
overzealous cuts to government spending in the short term could
derail a shaky recovery.
Bernanke earlier raised hopes of the U.S. central bank
embarking on a third round of economic stimulus, but in
testimony to the senate on Thursday he said the central bank was
not yet ready to take action.
“…The possibility of QE3 wasn’t clear in the first place,
so now that it’s taken off the table, it doesn’t hurt that
much,” Dongzheng Futures trader Du Xiao Hua said.
The euro zone debt worries were also weighing on market
sentiment. The European Banking Authority will publish results
of its health check of 90 banks across the European Union later
in the day.
Policymakers and bankers are examining radical proposals to
rescue Greece that include a sharp cut in its debt burden, ways
to prop up banks and a new emphasis on boosting Greek growth,
official and banking sources say.
The most-active September copper contract on the Shanghai
Futures Exchange fell 0.7 percent to close the session
at 71,640 yuan per tonne.
“What’s stopping ShFE copper prices from surging higher
right now is the fact that prices are too high while credit is
still tight in China. But downstream demand is good with end
users reporting strong orders on their books,” Du said.
But, looking forward, analysts are optimistic about copper’s
longer term outlook.
“There is a healthy appetite for copper at the moment, but
the Chinese are very disciplined traders – they like to buy but
only at the right price. I think we’ll see China buying on a
purely hand-to-mouth basis and just waiting for dips [in
prices],” said Citigroup analyst David Thurtell.
Barclays Capital analyst Chen Xinyi said: “We remain
confident that the Chinese are buying copper, albeit on a
“Going forward into the second half of the year,
even with such ‘hand-to-mouth’ mode of operation and refined
copper production being very strong, we still expect some pickup
in Chinese refined copper imports, which will be supportive for
international prices,” she added.
For more check the full article: http://af.reuters.com/article/idAFL3E7IF0NX20110715