Copper falls as China policy counters risk appetite
Copper eased on Thursday as moves by top consumer China to tighten rules for its mortgage lenders offset improving risk appetite, while investors looked ahead to key jobs data in the United States on Friday.
Benchmark copper for three-month delivery on the London Metal Exchange traded at $7,420 a tonne, down from $7,505 at the close on Wednesday and compared with a session low at $7,422.
“The Chinese government is now talking about stress testing banks, but you shouldn't overestimate it. They should know the results before they start the tests,” said Eugen Weinberg, an analyst at Commerzbank. “There is high risk appetite and high inflows into commodities markets,” he added.
China's banking regulator has ordered lenders to test the impact of a fall in house prices of up to 50 percent in key cities where prices have risen sharply, banking and regulatory sources said on Thursday.
The move, which runs counter to speculation in some quarters that China might ease some curbs before long to boost the slowing economy, is a new sign that Beijing is intent on fighting property speculation and deflating record prices. Also denting sentiment, China's benchmark Shanghai Composite Index ended down 0.7 per cent.
On Wednesday, data showed that the US service sector grew slightly more than expected in July and that private employers added 42,000 jobs in July, versus a revised gain of 19,000 in June.
The US numbers helped push copper, used in power and construction, to a fresh three-month top of $7,527 a tonne on Wednesday, up around 15 per cent this quarter.
But investors are now starting to focus on forthcoming data, particularly the US non-farm payrolls report on Friday, which will offer clues on the health of the economy. The consensus forecast is for a drop of 65,000 jobs in July.
Before that, data from Europe's largest economy Germany, showed that manufacturing orders beat expectations to rise by 3.2 per cent on the month in June.
Source : Business Standard
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