SINGAPORE: London copper futures were little changed on Thursday, reflecting caution among investors ahead of a high-stakes European Union summit aimed at resolving a crippling euro zone debt crisis that has weighed on the outlook for global demand.
Trading was also tepid ahead of a slew of Chinese data, including inflation and industrial output, to be released on Friday, although analysts say weaker numbers may prompt Beijing to cut bank reserve requirement further, which could boost commodity prices.
A senior German government official doubts that a deal will be reached at Friday's summit where France and Germany are endorsing a plan that would impose stricter fiscal discipline among euro zone countries.
The EU meeting, along with possible announcements by the European Central Bank of measures to fight the debt crisis later on Thursday, are the two major events for commodity markets, said Natalie Robertson, analyst at Australia and New Zealand Bank.
"Sentiment for industrial commodities appears to be a bit weaker ahead of these two key events," Robertson said.
"The market has been giving politicians the benefit of the doubt that they would deliver something substantial enough to reduce the impact of the crisis in Europe."
Three-month copper on the London Metal Exchange gained 0.1 percent to $7,830.50 a tonne by 0346 GMT. Volume on LME Select was a lean 1,553 lots.
LME copper has fallen 23 percent from a record of $10,190 reached in February and has only rebounded 18 percent from its lowest point this year of $6,635 touched in October.
The most-traded February copper contract on the Shanghai Futures Exchange eased 0.6 percent to 57,990 yuan a tonne.
Slow demand from top copper consumer China at a time when the euro zone debt crisis remains in full steam and the US economy is struggling has kept copper's gains in check.
There would be more evidence of China's economic state when fresh data are released on Friday.
"If these indicators are worse than what the market is expecting they could see another cut in the reserve requirement ratio," said ANZ'S Robertson.
China recently cut the reserve requirement for commercial lenders for the first time in three years, in what is seen as a policy shift to shore up an economy running at its slowest pace since 2009.
ANZ is expecting one more reserve requirement cut in China in December and two more in the first half of 2012, said Robertson.
Easier credit access in China, which consumes around 40 percent of the world's copper, should help copper recover next year, with ANZ predicting LME copper to average $9,064 a tonne.
Comments
Comments are closed for this article.