Copper suffers meltdown on growth anxiety, euro on defensive

Unease over the global economy engulfed commodities and dented Asian equities on Wednesday, while the euro loitered near nine-year lows as investors bet the European Central Bank was just a week away from launching a new stimulus campaign.

As if the plunge in oil prices is not enough of a worry for global policymakers, copper futures dived 6.2 percent to $5,499 a tonne when major chart support cracked and triggered a host of stop-loss sales.

The metal is often considered a barometer of industrial demand, so the slump leant extra gravitas to news the World Bank had cut its 2015 growth forecasts blaming sluggishness in the euro zone, Japan and some major emerging economies.

"The global economy is at a disconcerting juncture," World Bank chief economist Kaushik Basu told reporters. "It is as challenging a moment as it gets for economic forecasting."

That was a challenging background for equities and MSCI s broadest index of Asia-Pacific shares outside Japan slipped 0.3 percent. Australia s main index fell 0.9 percent, with mining shares taking an added blow from the drop in copper.

Seeking to support growth, Japanese Prime Minister Shinzo Abe s cabinet approved a record $812 billion budget while cutting new borrowing for a third straight year. The share market seemed underwhelmed, however, and the Nikkei lost 1.2 percent.

Falls in materials and energy shares had seen Wall Street end Tuesday with minor losses, and the omens were not bright for Wednesday with S&P EMINI futures down 0.3 percent.

The Dow eased 0.15 percent, while the S&P 500 dipped 0.26 percent and the Nasdaq 0.07 percent.

The dollar outpaced the euro on the back of upbeat U.S. economic data and after two European Central Bank (ECB) officials fuelled expectations that the bank would launch a program at its Jan. 22 policy meeting to buy government bonds.

The single currency was stuck at $1.1780 after reaching a low not seen since December 2005 at $1.1753. Against the yen, the euro slumped to its lowest in over two months around 138.17. Market attention now turns to the European Court of Justice (ECJ), which is expected to provide a nonbinding opinion on the legality of an ECB bond-buying program later on Wednesday. The pressure for policy action has grown intense as falling oil prices pulled consumer prices into negative territory across the euro zone last month. So far this week, Brent has lost 7 percent and U.S. crude 5 percent. On Wednesday, Brent gave up early gains and fell another 40 cents to $46.19 per barrel, while U.S. crude shed 46 cents to $45.43.

The impact was clear in the UK where inflation halved to just 0.5 percent in December, the lowest in over 14 years. That only reinforced market expectations the Bank of England would not be able to hike rates until 2016 at the earliest.