LONDON - European carbon emissions futures fell five percent to a new two-week low on Thursday due to deadlocked U.N. climate talks and warnings by ministers that they could fail, traders said.
Prospects for a strong U.N. climate change deal grew more remote on Thursday, with developed and developing nations deadlocked on sharing cuts in greenhouse gases.
EU Allowances for December 2010 delivery fell 72 cents or 5.01 percent to 13.63 euros a tonne at 1306 GMT, levels not seen since December 2. Volume was at 3,036 lots.
The failure to reach a climate deal could send carbon rights to close where it has started their recent rally -- 13.20 to 13.10 euros, said Jean-Francois Cauvet at Paris-based COER2.
Other traders and analysts saw further downside for EUA prices in the absence of a strong climate deal this week.
Danish hosts re-launched U.N. climate talks on Thursday after the United States backed a $100 billion global fund to support poor countries and world leaders gathered for a final effort to reach a deal. German Calendar 2010 baseload power was down 35 cents at 44.00 euros per megawatt hour.
U.S. oil pulled back to near $72 a barrel on Thursday, as the dollar's surge to a three-month high against the euro outweighed a surprisingly large fall in U.S. crude and distillate stockpiles.
Certified emission reductions fell 63 cents or 5.10 percent to 11.73 euros a tonne.