The reduction to the credit rating of the euro zone's second-largest economy pulled down copper futures on Tuesday as concerns spread about the recovery and healthfulness of the long-suffering regional economy, according to Reuters.
Gains for the reddish metal during the session one day prior ceased when the base metal benefited from strong economic data announced by Europe and the U.S.
The industrial commodity is sensitive to worldwide economic and financial developments due to its myriad uses in manufacturing, construction and other industry.
Moody's Investors Service pulled down the credit rating of France, which was expected. Trailing only Germany for size in the euro zone, France suffered the consequences of questions about its fiscal outlook as the sovereign debt crisis has been victimizing banks, markets and public finance systems in the 17-nation bloc during the past 36 months.
"This is exactly the kind of thing we can expect to see over the coming quarters – a few headlines of good news that are then reversed by ongoing problems, particularly in Europe and the U.S.," analyst Gayle Berry with Barclays told the news source. "I think that until those (growth concerns) are tackled at the core then prices are always going to be vulnerable to the ebb and flow of headlines."
At 10:44 a.m. on Tuesday, copper futures dropped 0.01 percent, a 0.0005-cent loss to $3.536 per pound.
But Tuesday's trade session is unlikely to largely impact the reddish metal's performance thus far this year.
With less than 45 days remaining in the year, copper futures have increased about 2 percent in 2012, Reuters reports.
Gains to the industrial metal achieved on Monday pushed it to its top value since November 2. Drivers of Monday's strong performance include economic data released by the U.S., which is the metal's second-largest consumer.
Sales of homes in the U.S. increased during the month of October while this month has seen builders' sentiment increase to its top rate since 2006. One home constructed in the U.S. typically consumes more than 400 pounds of the reddish metal.
Benefits from globe's top consumer
From September to October, home prices gained 0.05 percent in China, Reuters reports, citing the release of official data. The Asian nation is the globe's top consumer of the reddish metal.
The data suggests the globe's second-largest economy is resuming a modicum of normalcy after encountering hiccups for much of this year.
"With a focus on housing inflation, the latest data could prompt the government to refrain from relaxing curbs on the property market – bearish for copper," according to ANZ as cited by Reuters. "Markets are closely watching for any policy direction from the new leadership and will likely direct sentiment for base metals."
Moody's Investors Service reducing the credit rating of the second-largest economy of the euro zone occurred late on Monday, The Wall Street Journal reports.
That move disrupted the reddish metal's rise to its top price in two-plus weeks.
Moody's cited France's fiscal outlook and "structural challenges" as to why it pulled down the credit rating from Aaa to Aa1, a reduction of one level.
The reddish metal is likely to be impacted by the outcome of the Brussels meeting of euro zone finance ministers.
Tracking the euro
The price of copper futures fell as the euro lost value as well, Bloomberg reports.
The euro lost value against the monetary unit of Japan, which is the host of the globe's third-largest economy.
The losses to copper futures on Tuesday come after the industrial metal gained as much as 2.6 percent on Monday, according to Bloomberg.
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