20000309

Comex May copper eases on fund, spec sales

NEW YORK: Comex copper futures closed lower on Tuesday as funds and speculators whittled away positions, sending the market lower in search of firmer support levels, dealers and analysts said.

"There is perceived resistance in London at $1,780, and (prices) went there a couple of times and failed today," one New York broker said. "Copper may have been pulled off that level by the weakness in the stock market, but we remain essentially rangebound here."

Copper's inability to breach resistance levels on the London Metal Exchange (LME) triggered light liquidation there and in Comex, according to New York dealers.

Active May fell 1.00 cent to 79.45 cents a lb, trading from 79.15 to 81.00 cents, while spot March lost 0.95 to 78.40 cents and the rest slipped 0.90 to 1.00 cent.

Copper consolided further as dwindling open interest and thin trading volumes indicated that many participants were reluctant to enter the fray while prices remain volatile.

However, one broker said that "we move much lower, you're going to find new buyers coming out of the woodwork as people get short."

Traders pegged near-term support in May copper at 79.15 cents a lb and resistance at 81 to 81.30 cents a lb.

"Volume is very, very thin," AG Edwards commodity commentator James Quinn said. "The market started out firmer, but you might be seeing some weakness from the equity markets spilling over into copper."

On Tuesday, the Dow Jones Industrial Average fell sharply, losing 280.77 points or 2.76 percent as of 1450 EST, and crude oil futures surged to more than nine-year highs at $34 a barrel.

In London, LME three-months copper fell $18 to close at $1,749 a tonne, after being brushed back by resistance near $1,780 a tonne.

Dealers said that Comex and LME copper looked to each other for direction in recent weeks as the market has been bereft of fresh fundamental news, aside from the rise in warehouse stocks.

LME copper stocks rose 5,575 tonnes to 838,300 tonnes on Tuesday, while Comex stocks were unchanged at 95,902 short tons in Monday's report.

Final estimated volumes for Comex copper reached 8,000 contracts, compared to the official tally of 7,462 contracts on Monday.

Comex is a division of the New York Mercantile Exchange. -Reuters