Copper yesterday settled down by -0.6% at 397.40 as european economic data released last night were disappointing, fuelling concerns over global economic growth and base metal demand. Germany's GDP grew 0.1% QoQ in the first quarter, but still missed expectations. The French economy contracted 0.2%. Italy's economy shrank more than expected in the first quarter, extending the country's recession to seven straight quarters and making it the longest since quarterly records began in 1970. However, the US industrial production and New York manufacturing index announced later pointed to decline, raising hopes that the US Federal Reserve will keep QE3 in place. Market focus shifted from downbeat euro zone data to the ECB's possible stimulus policy. The rising homebuilder confidence index in the US further buoyed market sentiment. Rising stocks helped LME copper recover some losses and close 0.63% lower at USD 7,199/mt. The US April industrial production dropped more than expected by a seasonally adjusted 0.5%. On the other hand, NAHB's Housing Price Index for May beat expectations and employment also improved, lifting market sentiment. In response, US equities hit all-time highs across the board. Li Keqiang, Premier of the State Council said yesterday that stimulus policy and government investment alone are not enough to accomplish this year's economic target. Market mechanism should play an important role. His remarks dashed hopes for easing monetary policy by China's central bank. Several banks have recently lowered forecast for Chinese economic growth in 2013, undermining base metal demand. Now price is getting support at 393.3 and below same could see a test of 389.2 level, And resistance is now likely to be seen at 400.7, a move above could see prices testing 404.0.

Trading Ideas:

Copper trading range for the day is 389.3-404.1.

Copper dropped as European economic data released were disappointing, fuelling concerns over global economic growth

US industrial production and New York manufacturing index announced later pointed to decline, raising hopes that Fed will keep QE3 in place.

Germany's GDP grew 0.1% QoQ in the first quarter, but still missed expectations.