LONDON: Copper fell to its lowest in a week on Thursday after mixed US economic data and a bond sale by Spain failed to ease investor concerns that the heavily indebted nation may hinder the bloc's recovery, denting growth and commodities demand.
Three-month copper on the London Metal Exchange was down half a percent to $8,258.50 a tonne at 1023 GMT, down from a $8,305 close.
Prices, which had rallied by more than 14 percent by early February have shed five percent since then, trimming the year's gains to around 9 pct.
"There's a lot of people asking about Europe and how bad things are. Recent events in the Netherlands and France may have underlined people's concerns, but if you're really looking for something to worry about, Spain is top of the list," metals analyst Nic Brown of Natixis said.
Fears in the debt market that the deepening euro zone recession and a two-notch downgrade would hit Spain's ability to fund itself eased after the government sold new three- and five-year debt although its borrowing costs rose sharply.
But the spotlight is on the world's major central banks after surprisingly weak economic data from the United States and across the European Monetary Union (EMU) rekindled concerns about the strength of the global economic recovery.
The ECB is expected to keep its key interest rate at a record low of one percent, so the market's focus is on what President Mario Draghi will say at a news conference, later.
Brown said that markets were edgy ahead of Friday's non-farm payrolls data out of the US, where shaky data could further erode confidence in a global recovery, already off balance due to Europe's ongoing debt troubles and slowing economic growth in China, the world's top commodities consumer.
"There's a lot of people who are concerned that here we are in early May, which for the past two years has been a bloodbath....The picture for Chinese and European demand will get better in the second half. But near term there are risks," he added.
In 2011, copper prices dropped 12 percent in 12 days in from late April to early May last year. From mid April to early June 2010 copper shed one quarter of its value.
"The pull back across the metals yesterday does suggest that the recent rebound has run its course and that prices may head lower again," said FastMarkets in a note.
"Given the poor EU economic data, upcoming elections in Europe and concerns about US employment, we are not surprised metals are under pressure."
BACK PAIN
Unusually high prices for nearby copper on the London Metal Exchange are helping to support the benchmark prices, kept aloft by a lack of available copper around the world to deliver into LME-registered sheds.
The cost of rolling a short copper position for a day for those who are not able to deliver metal into LME warehouses, via the LME's tom/next contract , was last $5, having traded at $15 earlier in the day and at $30 on Wednesday.
Cash copper was trading at an $82.50 premium against the three months contract, having loosened from 3.5 year highs. which traders said could reflect expectations for large scale deliveries soon.
However, one London LME trader said he sees support on copper at $8,200-8,175 holding "as long there is not bad news out of Europe or US. I still think (there's) a few shorts who would like to cut their losses...the back is hurting," he said.
LME copper stocks fell by 3,750 tonnes net, data showed on Thursday as shipments continue to be sucked towards China on prospects of a pick up in second half demand.
Headline LME stocks at 235,200 tonnes the lowest since Oct 2008.
In other news, tight supply was highlighted as first-quarter copper production at Chilean miner Antofagasta fell 13 percent on the previous three months amidst rising development costs, the London-listed firm said on Thursday.
Elsewhere, tin was at $22,100 from $22,400 a tonne while zinc, used in galvanizing was at $2,009 f rom $2,020 o n Wednesday's c lose.
Battery material lead was at $2,108.25 from $2,132 a tonne and aluminium w as at $2 ,087.25 l ittle changed from $ 2, 098.
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