EU carbon rebounds from 3-month low, closes up 2 percent

LONDON (Reuters) - European Union carbon permit prices closed up over 2 percent on Friday rising 5 percent from a three-month low hit on Wednesday, but still ending a volatile week, fueled by speculative selling, lower.

EU Allowance futures for December delivery closed up 34 cents or 2.4 percent to 14.29 euros a tonne on moderate volume of 8,290 lots traded.

The benchmark contracts had traded as high as 14.39 euros before falling back in the last hour of trade.

"We've stabilized and more confidence came into the market today," said one trader.

Traders said the speculative selling that triggered stop-loss orders and pushed Dec-10 prices down to 13.61 euros on Wednesday had subsided, though most of the buying seen in the latter half of the week was done mainly by financials.

One broker said utilities, the main compliance buyers under the EU's Emissions Trading Scheme, were still conspicuously absent from the market. Some traders had expected utilities to hunt for bargains at these lows.

The benchmark contracts finished the week down 2.5 percent and are still down 6 percent in July and 15 percent below the 2010 high of 16.73 euros hit in early May.

Although they closed above their 200-day moving average, the Dec-10s failed to touch to their 100-day average at 14.55 euros, or close above a key technical resistance at 14.30 euros.

Dec-10 CERs also finished the week strong, gaining 34 cents or 2.9 percent to 12.20 euros at tonne. The Dec-11s and Dec-12s both closed up over 2 percent at 11.90 euros.

The Dec-10 EUA-CER spread ended the week at 2.09, while the Dec-12 spread closed at 3.35 euros.

U.S. crude oil slipped below $76 a barrel, dropping alongside equities as weak U.S. consumer sentiment and falling consumer prices lowered investor appetite for risk.

German Calendar 2011 baseload power trading on the EEX added 18 cents to 51.25 euros per megawatt hour while day-ahead UK gas lost 0.1 pence to 48 pence per therm.

A scaled-back U.S. climate change bill Senate Democrats are considering would achieve far less than President Barack Obama promised at a U.N. global warming conference last year -- but even this may be too much for Congress.

With little time left in a short, crowded legislative schedule this year, Senate Democratic leaders are weighing a final attempt to begin reducing CO2 emissions.

Instead of the kind of economy-wide scheme the House of Representatives approved last year, senators are trying to rally support for a narrower plan that would set pollution caps only on the electric power sector -- covering about one-third of the country's greenhouse gas emissions.