NEW YORK/LONDON (Reuters) - Copper prices steadied on Thursday after sliding for four straight days and touching four-month lows, but traders remained wary about the metal’s prospects amid fears of more fallout from Europe should Greece exit the euro.
For the first time since Friday, copper futures in London and New York inched toward positive territory as support returned to commodities deemed oversold in the risk flight of the past week.
Still, worries about how Europe -- particularly Spain -- would manage Greece’s exit from the euro hung heavily on markets, including copper.
A bond sale by Spain came at a markedly higher cost for the government than before, signaling investors’ growing concern about the possibility of a contagion impact should Athens default on its own sovereign debt.
“Copper’s still seeing tension because it’s an industrial play and because people are worried that Greece’s eventual exit from the euro zone and the debts it creates would have a ripple effect on Spain,” said Zachary Oxman, managing director at TrendMax Futures in Encinitas, California.
U.S. copper futures’ most active contract, July, settled up one tenth of a penny at $3.4790 a lb on the COMEX metals division of the New York Mercantile Exchange.
On the London Metal Exchange (LME, three-month copper ended at $7,649 a tonne, not far off the close of $7,655 on Wednesday.
Investors are largely betting on a Greek euro exit, given that Greek politicians who reject conditions of a bailout that is keeping the country’s finances afloat are seen likely to win next month’s election.
The European Central Bank said it had stopped providing liquidity to some Greek banks that had not been successfully recapitalized.
In addition, customers of Greek banks were reportedly moving funds in anticipation of Athens’ euro exit.
“If anything, things seem to be getting worse (in Europe), as the focus now seems to be reverting away from the political deadlock in Greece and towards the deteriorating rate situation in Spain,” said INTL FC Stone analyst Ed Meir.
Spain sold 2.49 billion euros of shorter-dated government bonds at Thursday’s auction, with average yields rising significantly compared with previous sales of the paper.
In the United States, a gauge of future U.S. economic activity fell in April for the first time in seven months. The Philadelphia Fed business conditions index hit its lowest since September.
Data from the LME showed overall inflows of 2,100 tonnes of copper into warehouses monitored by the exchange, with those in Busan, South Korea drawing in 2,875 tonnes of the metal.
Traders said China’s smelters and merchants were delivering around 110,000 tonnes of refined copper cathode to London Metal Exchange (LME) warehouses in South Korea, in a rare hefty outflow of inventories that could pressure copper prices.
The exports come just two weeks after the trading unit of Jiangxi Copper Co Ltd (0358.HK) (600362.SS), the country’s top producer, said a group of copper smelters as well as trading firms would export refined copper cathodes to LME to help ease tight global supplies and trim near-record stockpiles at home.
In other metals, aluminum ended at $2,054 a tonne from Wednesday’s close of $2,035, while zinc closed at $1,900 a tonne from $1,898, having hit its lowest since early January at $1,882.
Nickel closed at $17,195 a tonne from $17,005, tin ended at $19,200 from $19,675, having hit its lowest since early January at $19,150; while lead closed at $1,927 a tonne from $1,971, having hit its lowest since last December at $1,925.
Editing by Bob Burgdorfer