Copper extends losses to close at US$3.382/lb on EU crisis

Copper closed Thursday at US$3.382/lb cash on the London Metal Exchange, down from the previous day's US$3.480/lb and accumulating two consecutive declines. The bearish sentiment in financial markets as a result of the European sovereign debt crisis has continued to weigh on red metal prices. "Given the dire and escalating situation in Europe it is difficult to be anything other than bearish for the markets. Prices are likely to react to positive news flow, but it is likely to take some major development to make any rebound stick. As such, we hold our view that the down trends will dominate and rebounds will attract more selling," analyst William Adams from FastMarkets said. To add to the negative sentiment, the EU cut its growth forecast in 2012 from 1.8% to just 0.5%. "Growth has stalled in Europe and there is a risk of a new recession," European Commissioner Olli Rehn said. Downward pressure on copper and other base metals is expected to remain in place and to deepen further in the near future as the markets and policymakers are still yet unclear on what shape a resolution to the European sovereign debt crisis will take, according to UK-based investment bank Barclays Capital. "Base metal price action is all about the politics at present. The continued rise in Italian bond yields and growing concerns over a Europe-wide collapse pulled metals prices lower yesterday [Nov 9] and further still this morning," the bank said in its commodity briefing. "Even in spite of some supportive supply side news and positive Chinese import data, copper prices have continued to slide to the lowest since the end of October," the bank added. Chinese copper imports rose again in October and with regional inventories still drawing and price signals positive, imports look set to remain strong into the year end, according to the bank. In precious metals, gold closed Thursday at US$1,756.00/oz on the London Bullion Market, down from the previous day's US$1,784.00/oz. Silver closed Thursday at US$33.71/oz, also down from the previous session's US$34.58/oz. Both gold and silver were weaker on Thursday as the US dollar has continued to strengthen against the euro and also suggesting there is still some shift to cash even from bullion, according to Adams.