Exchange traded funds indexed to copper and copper miners erased early losses Tuesday, closing with solid gains following reports that Europe’s financial bailout fund may be boosted.
The iPath Dow Jones- UBS Copper Sub-Index Total Return ETN (JJC), which follows copper futures, added nearly 2%.
Copper futures contracts for October delivery were down 1.7% earlier Tuesday.
China, which accounts for 40% of global copper demand, revealed that its economy expanded at a slightly lower-than-expected 9.1% pace in the third quarter.
“Slowing growth in China has given the bears new reasons to roar this morning,” according to an RBC Capital Markets note, WSJ.com reported.
Copper rallied along with stocks Tuesday after a report that France and Germany have reached a deal to increase the Eurozone rescue fund.
Still, concern over Europe’s finances was reignited after Moody’s Investors Services cautioned that France’s sterling triple-A rating was under pressure. Europe, as a whole, is the second largest global consumer of copper.
However, Aurubis, Europe’s largest copper miner, stated that Chinese and European copper demand is still holding, reports Michael Hogan for Reuters. The copper producer noted that Eurozone industrial activity is still high and the recent pullback in copper prices has allowed Chinese importers to take advantage of an arbitrage opportunity.
“There is little to indicate a sharp drop in demand just now,” Aurubis said in a report. “In view of the continuing inadequate level of copper production, the copper price should therefore be fundamentally well buttressed against any decrease.”
iPath Dow Jones- UBS Copper Sub-Index Total Return ETN
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Max Chen contributed to this article.