LONDON - Prices for European carbon emissions futures on Tuesday clawed back a little of Monday's 9 percent falls, as bearish sentiment waned over a watered-down deal at the U.N. climate talks in Copenhagen. EU Allowances for December 2010 delivery closed 2.01 percent higher at 12.70 euros ($18.17) a tonne, with volume at 4,378 lots.
Prices should recover to around 13 euros by the end of the week, Societe Generale/orbeo analyst Emmanuel Fages said in a research note.
On Monday, traders sold EUAs as confidence in the market was battered by the bare-minimum climate deal that emerged from Copenhagen. Prices fell 8 percent in opening trade, and had fallen another 1 percent by the close.
German Calendar 2010 baseload power was up 1.47 percent at 44.75 euros per megawatt hour.
On Tuesday, certified emissions reductions closed 1.37 percent higher at 11.13 euros a tonne.
Oil trading firm Gunvor International executed its first trade in the European carbon market on Tuesday, the company told Reuters.
We did our first EUA, ECX-cleared trade with broker ICAP in the market this morning, said Michael Uzzan, emissions trader at Gunvor.
U.S. lawmakers face an uphill battle enacting a climate bill in 2010 that includes a cap-and-trade market in greenhouse gases, after this month's U.N. meeting in Copenhagen.
U.S. climate legislation remains likely as lawmakers feel pressure to help the country lead in production of low-carbon energy sources such as wind, solar and nuclear power.
But the Copenhagen Accord did not include emissions targets, making it difficult for lawmakers to argue that the United States should have a cap while China, the world's top emitter of greenhouse gases, and other big polluters are not legally required to act on climate.
(Reporting by Nina Chestney; Editing by Keiron Henderson)