Copper declines as China mini-stimulus package disappoints

Copper prices declined on Thursday, after China unveiled a mini-stimulus package, disappointing market expectations for more drastic measures.

On the Comex division of the New York Mercantile Exchange,copper for May delivery traded at $3.025 a pound during European morning hours, down 0.67%, or 2.0 cents.

Copper fell to a session low of $3.015 a pound earlier, the least since March 28. Futures tacked on 0.36%, or 1.1 cents, on Wednesday to settle at $3.045 a pound.

Futures were likely to find support at $2.990 a pound, the low from March 28 and resistance at $3.074 a pound, the high from April 2.

China's State Council said Wednesday that it will increase spending on railways and housing, as policymakers attempt to boost slowing growth in Asia’s largest economy.

However, the announcement disappointed market participants, who had expected more stimulus in the form of looser monetary policy, such as a cut in bank reserve requirements.

Mixed data on China’s services sector also weighed. HSBC’s China services Purchasing Managers’ Index rose to 51.9 last month from 51.0 in February, but the official nonmanufacturing PMI fell to 54.5 in March from 55.0 in the previous month.

The Asian nation is the world’s largest copper consumer, accounting for almost 40% of world consumption last year.

Elsewhere on the Comex, gold for June delivery shed 0.35%, or $4.50, to trade at $1,286.30 a troy ounce, while silver for May delivery lost 0.96%, or 19.2 cents, to trade at $19.85 an ounce.

Gold and silver prices weakened ahead of the release of upcoming U.S. economic data and a policy meeting by the European Central Bank later in the day.

The U.S. is to publish the weekly report on initial jobless claims as well as a report on service sector activity. Investors were also beginning to turn their attention to Friday’s highly-anticipated nonfarm payrolls data.

Traders will also be awaiting the outcome of the ECB’s policy meeting later Thursday, amid growing concerns over the threat of deflation in the region. - investing.com