Copper, other metals fall as economic outlook dims

AP News
Posted: Aug 05, 2011 5:04 PM
Copper, other metals fall as economic outlook dims

Copper fell nearly 3 percent Friday as Europe struggles to contain its debt crisis and investors become more doubtful that the U.S. economy will recover this year.

Other metals also fell, including palladium and platinum. Gold edged lower after reaching new highs this week as stocks plummeted in the U.S. The stock drop had led investors to pour money into gold and other assets like bonds that are believed to have a better chance of holding their value.

Weaker manufacturing, service sector growth and a lack of significant improvement in the job market have led investors to become more pessimistic about prospects for an upturn in the U.S.

The government reported that 117,000 jobs were created last month, but that's only about half the amount that would be needed every month to make a dent in unemployment. The unemployment rate edged down in July to 9.1 percent, but that's partly because some people gave up looking for work.

Meanwhile European leaders are scrambling to reassure markets that Italy, the No. 3 economy in the region, won't come close to the brink of financial disaster like Greece and Ireland did. Many economists think Europe's current financial bailout mechanism wouldn't be big enough to backstop a large economy like Italy's. Italy pledged Friday to support a constitutional amendment requiring the government to balance its budget.

Europe's debt troubles, economic sluggishness in the U.S. as well as signs of a slowdown in China have tempered investors' appetites for industrial metals. Demand for those kinds of basic materials tends to fluctuate along with global economic growth.

Copper for December delivery fell 11.85 cents to settle at $4.117 per pound. September palladium fell $11.20 to $741.75, and October platinum fell $10.30 to settle at $1,719.10. Silver for September delivery fell 1.22 cents to $38.211 an ounce.

Gold fell $7.20 to $1,651.80. Gold prices set new highs this week, but they're still below the level they traded at in 1980 after accounting for inflation.

Agricultural commodities were mixed.

Wheat for September delivery fell 2.75 cents to settle at $6.79 per bushel. December corn rose 1.5 cents to $7.03 per bushel and November soybeans fell 9.25 cents to $13.36 per bushel.

In energy trading, benchmark crude for September delivery edged up 25 cents to $86.88 per barrel on the New York Mercantile Exchange.

Heating oil rose 4.78 cents to settle at $2.9417 per gallon. Gasoline futures rose 6.8 cents to $2.8052 per gallon and natural gas settled unchanged at $3.941 per 1,000 cubic feet.

Friday was a relatively calm day in commodities trading, a day after oil, gasoline, silver and palladium slumped 5 percent as a stock market rout rattled investors.