China concern hits stocks; copper rebounds from near 4-year low

Signs of progress in diplomatic attempts to ease tensions surrounding Ukraine helped equities pare earlier declines.

Global stock indexes declined for a fourth day and copper dipped to near four-year lows before rebounding on Wednesday as increasing concern about China’s economic slowdown unnerved investors.

The concerns over China also pressured the Chilean peso and other currencies closely linked to commodities markets, while increasing investor appetite for safe-haven assets boosted US government bonds and gold. The moves follow China’s first domestic bond default, which has raised concerns about a possible unraveling of the many loan deals which have used the metal as collateral.

Chinese firms that have difficulty raising loans have often bought copper as security for funds they borrow, but the 14 per cent drop in copper’s value this year is making banks more wary about the practice.

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Copper on the London Metal Exchange slid to a session low of $6,376.25 a tonne, its weakest level since July 2010, before recovering to end at $6,505, up 0.5 per cent from Tuesday’s close. Three-month LME copper has shed more than 11 per cent this year, including a 2.6 per cent drop on Tuesday. On Wall Street, the Dow Jones industrial average fell 0.17 per cent, the S&P 500 lost 0.12 per cent and the Nasdaq Composite added 0.21 percent.

Signs of progress in diplomatic attempts to ease tensions surrounding Ukraine helped equities pare earlier declines.

In Europe, shares closed down 1.0 per cent, while an index of global stocks was down 0.6 per cent.