Copper fell to its lowest in a week on Thursday after US economic data was mixed and a bond sale by Spain failed to ease investor concerns that the heavily indebted nation may hinder the euro zone's recovery, denting growth and commodities demand.
Three-month copper on the London Metal Exchange was down half a percent to $8,255 a tonne in official rings from a $8,305 close on Wednesday.
Prices, which had rallied by more than 14 percent by early February, have since shed 5 percent, trimming the year's gains to around 9 percent.
“There's a lot of people asking about Europe and how bad things are. Recent events in the Netherlands and France may have underlined people's concerns, but if you're really looking for something to worry about, Spain is top of the list,” metals analyst Nic Brown of Natixis said.
Fears eased in the debt market that a deepening recession and a two-notch downgrade would hit Spain's ability to fund itself after the government sold new three- and five-year debt, although its borrowing costs rose sharply.
But the spotlight is on the world's major central banks after surprisingly weak economic data from the United States and across the European Monetary Union (EMU) rekindled concerns about the strength of the global economic recovery.
The European Central Bank held its main interest rate at 1.0 percent on Thursday as stubborn inflation offset pressure to loosen borrowing costs further to support the weak euro zone economy.
The market's focus is now on what President Mario Draghi will say at a news conference at 14:30 SA time.
Brown said markets were edgy ahead of Friday's US non-farm payrolls data, which could further erode confidence in a global recovery, which is already off balance due to Europe's ongoing debt troubles and slowing economic growth in China, the world's top commodities consumer.
“There's a lot of people who are concerned that here we are in early May, which for the past two years has been a bloodbath ... The picture for Chinese and European demand will get better in the second half. But near term there are risks,” he added.
In 2011, copper prices dropped 12 percent in 12 days from late April to early May. From mid-April to early June 2010 copper shed one quarter of its value.
“The pull-back across the metals yesterday does suggest that the recent rebound has run its course and that prices may head lower again,” said FastMarkets in a note.
“Given the poor EU economic data, upcoming elections in Europe and concerns about US employment, we are not surprised metals are under pressure.”
INDONESIA EXPORTS
Indonesia will impose an average 20 percent export duty on 14 mineral ore exports including copper, gold and tin from May 6, the country's mining minister said on Thursday.
The tax, which has been expected in recent months, will not apply to coal, which will be ruled on separately, said Jero Wacik, leaving open the possibility of a future tax on shipments from the world's largest thermal coal exporter.
However, nickel traders said even an export ban on nickel laterite ore may not have a major impact on the market, which is sinking under the weight of new mining projects coming on line and a slowdown in the stainless steel sector.
“I don't believe it will make a great deal of difference to the amount of pig iron that is produced. What would make a difference is demand for the product,” an LME trader said.
Elsewhere, tin was untraded but bid at $22,050 from $22,400 a tonne while zinc, used in galvanising was at bid at $2,008 from $2,020 on Wednesday's close.
Battery material lead likewise was untraded but bid at $2,108 from $2,132 a tonne and aluminium was bid at$2,088 from $2,098. - Reuters