Traders and clerks at work at the London Metal Exchange, London, July 22, 2011.
Credit: Reuters/Paul Hackett
SHANGHAI |
SHANGHAI (Reuters) - London copper edged down on Tuesday, as investors refocused on the problems that still beset the euro zone after a surge in Spanish and Italian bond yields, and as optimism over the Greek elections result faded.
Losses were expected to be capped ahead of the United States Federal Reserve's two-day policy meeting starting on Tuesday, with some economists predicting that the U.S. central bank may unveil more stimulus measures in response to recent disappointing economic data.
Three-month copper on the London Metal Exchange edged down just $4 to $7,506 a metric ton by 0728 GMT after slipping less than a dollar on Monday.
Prices hit a high of $7,615 in the prior session, the highest since May 30 on the election victory of Greece's pro-bailout parties, but soon retreated after that relief faded.
The most-active October copper contract on the Shanghai Futures Exchange inched down 0.5 percent to 54,670 yuan ($8,600) a metric ton, after rising slightly on Monday.
"The Greek election result was just a short-term boost, while Spain's financial problems are the bigger and longer-term problem. With so many uncertainties surrounding the euro zone now, it's hard to maintain any upward momentum," said a Shanghai-based trader.
Still, some investors expected the Fed to announce some form of monetary easing this month - a belief that also helped to put a floor under prices.
"There are many people out there who think that the U.S. Fed will roll out some form of monetary easing during its upcoming meeting," said a second Shanghai-based trader.
In the physical market, traders said copper demand in top consumer China continued to be sluggish.
"We feel a marked slowdown in demand for our products this year as compared to the same period in previous years. Domestic demand is slowing, and so is Europe's demand for China's exports," said an executive with a top Chinese copper fabricator.
"Other than the electronics industry, which is still doing OK, the rest of our downstream clients are struggling. The government's infrastructure spending has not started to benefit our clients in the construction industry yet."
Although liquidity was gradually easing and Beijing has approved a number of infrastructure projects, industry participants said its impact on copper markets would only be felt late in the third quarter or towards the end of the year.
(Reporting by Carrie Ho; Editing by Daniel Magnowski)
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