A worker looks through industrial scrap materials at Dowa Holdings Co's Eco-System Recycling Co, a recycling plant, in Honjo, north of Tokyo March 28, 2008.
Credit: Reuters/Yuriko Nakao
SHANGHAI |
SHANGHAI (Reuters) - Shanghai copper fell more than 3 percent on Monday to its lowest since October 24, dragged down by disappointing jobs data in the United States last week.
The U.S. unemployment rate rose for the first time in nearly a year in May, data showed on Friday, aggravating fears of a global slump and pushing down yields on U.S. and European debt to record lows as investors scurried for safety.
The most-active September copper contract on the Shanghai Futures Exchange stood at 52,530 yuan ($8,200) a tonne at 00:17 a.m. EDT (0417 GMT), after tumbling to a trough of 52,430 yuan earlier in the session.
"There is panic in the air over the health of global economics, as is evident from a sell-off in most assets," said Great Wall Futures analyst Li Rong.
"I am surprised at how much prices have dropped this morning. The fiercest selling took place in the 15 minutes before ShFE closed for its midday break. Trading volumes and open interest both rose today, indicating the entry of fresh shorts," said a Shanghai-based trader with an international firm.
The euro edged back towards a near two-year low against the dollar on Monday. <USD/>
Investors remain cautious over the escalating financial turmoil in Europe, where Spain's government has delayed by at least a week the adoption of a new mechanism to ease the funding problems of its heavily indebted regions, a government source said on Friday.
Fears over the Spain's finances offset news of European Union paymaster Germany softening its drive for austerity across the euro zone on Friday. Berlin agreed to allow Spain more time to cut its deficit while it battles a deepening bank crisis, capital flight and recession.
In China, the world's second-largest economy and the main engine of global growth in recent years, data is pointing to slowing growth.
The country's official purchasing managers' index - covering China's biggest, mainly state-backed firms - fell more than expected to 50.4 in May, its weakest reading this year and down from April's 13-month high, with output at its lowest since November 2011.
Market players noted a lack of trading direction, with investors split in their forecasts of copper's outlook.
"...there are also conflicting feelings among investors: some are closing their positions thinking that this feels too much like the financial crisis in 2008, while others are hopeful that governments around the world will roll out stimulus packages to combat their financial problems," said Great Wall's Li Rong.
A Reuters poll showed that Wall Street believes that a much weaker-than-expected U.S. labour market alongside escalating financial turmoil in Europe raise the chance of the Federal Reserve intervening to protect the fragile U.S. economic recovery.
But the Shanghai-based trader with an international firm said he was bullish based on technicals. "I think copper is oversold and that we are treading on its support of 52,000 yuan now. But everyone seems to believe something different today."
The London Metal Exchange is closed for the Diamond Jubilee Holiday on June 4 and June 5.
(Reporting by Carrie Ho; Editing by Chris Gallagher)
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