EU carbon plummets to 3-month low near 14 euros

LONDON (Reuters) - European carbon permits tumbled by over four percent on Monday, breaking through a key technical support level and triggering stop-loss orders which sent prices down to a 3-month low near 14 euros a tonne.

Emissions traders said weaker German power prices kicked-off carbon's late afternoon fall, which sent EU Allowances prices to their lowest level since April 16.

Dec-10 EUA futures tumbled by over 20 cents in around 10 minutes after breaking below 14.30 euros at 1456 GMT. Prices then fell as low as 14.01 by 1539 GMT, down 64 cents or 4.4 percent, before closing at 14.07 euros.

Volumes were moderate at 14,362 lots traded.

"German power fell and caused carbon to break through 14.30 euros, a key technical level, and that triggered stop-losses which sent prices even lower," said one emissions trader.

European electricity prices eased across the board, driven lower by the arrival of cooler temperatures, cutting demand for air conditioning, and more wind power capacity in Germany.

German Calendar 2011 baseload power fell by some 65 cents to 51.05 euros per megawatt hour.

"Dec-10 EUAs could drop below 14 euros a tonne, as there are no buyers in this market at the moment," said Emmanuel Fages, a carbon analyst at Societe Generale/orbeo.

"There has definitely been a bearish movement starting from last week's UK EUA auction, which was less oversubscribed than usual," he told Reuters by phone.

"There are no utilities supporting these prices, so speculators are freely shorting the market."

Britain sold 4.4 million EUAs last Thursday at 14.65 euros a tonne in an auction that was only 5.14 times over-subscribed, below an average rate of nearly six times.

Dec-10 CER prices were also lower, falling 50 cents or 4.1 percent to 11.70 euros a tonne, the lowest level since April 6. This set the EUA-CER spread at around 2.35 euros.

U.S. crude oil futures fell further and were down more than a dollar as equities slipped ahead of the unofficial start of the second quarter earnings season and as the dollar strengthened, oil traders said.