BASE METALS: Comex Copper Extends Loss After US Confidence Data

By Allen Sykora

Of DOW JONES NEWSWIRES

Copper futures extended their early losses Tuesday after a weaker-than-forecast reading on U.S. consumer confidence also sent stocks lower.

At 10:17 a.m. EST (1517 GMT), the March copper contract is down 7.50 cents, or 2.27%, to $3.2315 per pound on the Comex division of the New York Mercantile Exchange. May, which has the most open positions, is down 7.65 cents, or 2.30%, to $3.2520.

The metal fell in overnight trading, and research notes from several analysts mainly tied this to gains by the U.S. dollar. This tends to pressure copper by making it more expensive in other currencies.

The euro fell after the German Ifo sentiment index fell to 95.2 this month from 95.8 in January instead of rising to 96.4 as forecast. The common European currency is at $1.3551, compared to $1.3593 late Monday.

Around mid-morning in New York, May copper hit a low for the day of $3.2485 a pound.

"It dipped on the consumer confidence," said one New York trader.

This also sent stocks lower, and the concerns about the economy that bogged down equities also hurt copper.

The Conference Board, a private research group, said its index of consumer confidence declined to 46.0 this month from a revised 56.5 in January. The February reading was far below the 54.8 expected by economists surveyed by Dow Jones Newswires.

Copper had already been ticking lower this week as some of the "euphoria" from last week's rally faded, said the trader.

"There are concerns, perhaps even fears, about the situation with the world economy," he said.

Stephen Platt, analyst with Archer Financial Services, said some pressure may have come early in the day from overnight weakness in Chinese equities. Lower stocks are often seen as a sign of possibly softer economic conditions that in turn could mean less demand for copper.

Platt said there also may be some skepticism about whether further economic stimulus will occur in the U.S.

"The market is easing back in the absence of any fresh bullish news and any real evidence of strong physical demand at these price levels," he said.

Any buying by copper users lately appears to be "hand to mouth" in which they are purchasing for their immediate needs rather than buying more during the market's recent rise, Platt said.

Traders are awaiting Federal Reserve Chairman Ben Bernanke's testimony before congressional panels Wednesday and Thursday for any clues on when policy makers might start hiking interest rates.

Platt put nearby support for May copper at $3.20 and $3.14 a pound. He put initial resistance around $3.30 to $3.32, then $3.40 to $3.44.

-By Allen Sykora, Dow Jones Newswires; 541-318-8765; allen.sykora@dowjones.com