LONDON: European carbon prices rose 4.5 percent on Wednesday, ending seven consecutive days of losses and rebounding as traders snapped up lower-priced permits.
By 1605 GMT, the ICE December 2014 EU Allowance (EUA) traded at 6.09 euros per tonne, up 26 cents on Tuesday's settlement after moving in a 35 cent range from 5.79 to 6.14 euros.
"Some people who had been long were cleaned out after the last few days and saw these levels as a good point to return to the market," a carbon trader said.
Benchmark futures lost more than 16 percent from March 7-18 with breaks of technical levels prompting automatic selling and causing some players to stop out, traders said. The market was also buoyed on Wednesday by a fortnightly pause in government sales of EUAs.
"Fundamentally, with the lack of an auction today and the general cuts in supply there was no reason for prices to go any lower," a second trader said.
Following a British sale last Wednesday, this week marked the start of the first auctions under the EU's so-called backloading plan, which will reduce the number of permits sold in government auctions this year by a total of 400 million, effectively slashing 2014 permit sales by around 40 percent.
Around 28 million EUAs of all vintages had changed hands across Europe's main exchanges compared with a daily average so far in 2014 of around 35 million.
Meanwhile German baseload power prices for next year delivery hit a 9-year low of 35.10 euros/MWh which power traders said was a result of overcapacity in the market.
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