Copper futures decline as investors await Italy bond auction, U.S. data

Copper futures were lower during European morning hours on Wednesday, as investors awaited the results of an Italian government bond auction later in the day

On the Comex division of the New York Mercantile Exchange, copper futures for May delivery traded at USD3.573 a pound during European morning trade, down 0.3% on the day.

New York-traded copper prices fell by as much as 0.4% earlier in the day to hit a session low of USD3.595 a pound. Comex copper prices rose to a one-week high of USD3.525 earlier in the session.

Investors were looking ahead to an auction of Italian five- and ten-year government bonds later in the session after the country’s general election resulted in a deadlock.

Italian election’s ended with no party or coalition in control of the Senate, raising the threat of a prolonged period of political instability and potentially reigniting the crisis in the euro zone.

Italian 10-bond yields rose to the highest level since December on Tuesday, climbing to 4.91% from 4.37% on Monday, while the yield on Spanish 10-year bonds rose to 5.5% from 5.1% on Monday.

Copper traders were also worried about impending sharp automatic U.S. spending cuts of USD85 billion, known as sequestration, due to take effect on March 1 unless Congress and the White House find a way to reach an agreement.

Prices remained supported after Federal Reserve Chairman Ben Bernanke defended the central bank's easing program in testimony to the Senate on Tuesday and amid indications the U.S. economic recovery is gathering momentum.

Later Wednesday, the U.S. was to publish official data on durable goods orders and pending home sales, while Ben Bernanke was to testify on monetary policy for a second day. 

Elsewhere on the Comex, gold for April delivery dipped 0.45% to trade at USD1,608.20 a troy ounce, while silver for May delivery shed 0.5% to trade at USD29.17 a troy ounce.