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Copper futures fall to 4-month low as Cyprus jitters linger

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Shutterstock photo - Copper futures were lower during European morning hours on Tuesday, trading at the weakest level since November as worries over a controversial bailout deal for Cyprus weighed on appetite for riskier assets.

On the Comex division of the New York Mercantile Exchange, copper futures for May delivery traded at USD3.417 a pound during European morning trade, down 0.3% on the day.

New York-traded copper prices fell by as much as 0.7% earlier in the day to hit a session low of USD3.404 a pound, the weakest level since November 9.

Sentiment weakened on Monday following news that a one-time tax was to be imposed on bank deposit holders as part of a EUR10 billion bailout deal for Cyprus.

The agreement marked the first time since the onset of the euro zone debt crisis that depositors have been forced to take a haircut in return for financial aid.

Investor confidence slightly improved however, following reports that the Cypriot government was working on a revised deposit tax proposal, aimed at lessening the impact on smaller depositors ahead of a parliamentary vote later Tuesday.

Copper prices struggled further due to a stronger U.S. dollar, as dollar-priced commodities become more expensive to investors holding other currencies when the greenback gains.

The dollar index, which tracks the performance of the greenback against a basket of six other major currencies, was up 0.15% to trade at 83.00.

Concerns over a possible slowdown in China amid renewed government efforts to curb soaring property prices also weighed on the industrial metal.

China is the world's largest copper consumer, accounting for almost 40% of world consumption last year.

Market players now looked ahead to the Federal Reserve's two-day policy meeting due to begin later in the day, as investors try to assess the central bank's attitude towards monetary stimulus.

Data on Friday showed that U.S. inflation was contained in February, leaving the way clear for the central bank to continue its bond-buying program.

Elsewhere on the Comex, gold for April delivery shed 0.2% to trade at USD1,601.60 a troy ounce, while silver for May delivery dipped 0.25% to trade at USD28.80 a troy ounce. - offers an extensive set of professional tools for the Forex, Commodities, Futures and the Stock Market including real-time data streaming, a comprehensive economic calendar, as well as financial news and technical & fundamental analysis by in-house experts.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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