EU carbon falls 2 percent, lacks energy price support

LONDON (Reuters) - European carbon emission futures fell by two percent by mid-morning on Monday on a lack of support from energy prices and low industrial output, traders said.

EU Allowances for December delivery fell by 27 cents or 1.93 percent at 13.74 euros ($17.74) a tonne at 1016 GMT, having fallen as low as 13.67 euros. Volume was at 3,733 lots traded.

Technical analysis points toward a bearish trend for the benchmark EUA contract as it moved below the five-day moving average of 14.03 euros in early business, traders said.

Cooler temperatures forecast across Europe, coupled with ample nuclear and renewable energy supplies, are weighing on EU electricity prices, prompting some traders to close their positions, traders said.

Prices are expected to trade sideways between 13.60 euros and at most 14.76 euros this week as many market participants are on holiday, manufacturing activity is low and summer temperatures are average.

"There is no extra EUA demand expected which could potentially drive up prices," one trader said.

However, a new wave of buying activity could emerge before the end of August as utilities' margin from selling a unit of electricity, or the clean spark spread, continues to fall and more people return to the market.

German Calendar 2011 baseload power on the EEX was down 45 cents or 0.91 percent at 49.20 euros per megawatt hour.

Crude oil eased below $79 a barrel as Tropical Storm Bonnie faded over the Gulf of Mexico, but trading was cautious ahead of U.S. economic and corporate earnings data.

The benchmark certified emissions reductions (CER) contract was down 9 cents or 0.75 percent at 11.85 euros a tonne.

In the United States, the Commodity Futures Trading Commission has granted approval to environmental futures exchange Green Exchange to operate as an independent bourse, the company said.

The exchange's derivatives products include EUAs, CERs, Regional Greenhouse Gas Initiative allowances and climate reserve tonnes. They are currently listed, traded and regulated by the New York Mercantile Exchange.