EU carbon drops on energy, Lehmans shuts CO2 desk

European carbon futures dropped four percent on Monday as turmoil hit the global energy markets, traders said.

Lehman Brothers shut down its carbon desk after the bank went into bankruptcy protection, a source close to the company told Reuters.

The U.S. investment bank filed for Chapter 11 protection on Monday while Merrill Lynch, also plagued by toxic, mortgage-related debt, agreed to be bought by Bank of America.

Merrill's carbon desk was open as usual on Monday, another source familiar with the matter said.

European Union Allowances for December delivery lost 85 cents or 3.6 percent at 23.05 euros a metric ton. Volume was healthy at 1,879 lots traded.

"Everything's off today. Coal's come off massively...but carbon hasn't really gained much support from that," an emissions trader told Reuters.

Historically, coal prices are negatively correlated to carbon."Maybe it'll put the brakes on carbon in terms of how far it drops ... (EUA's) have some good support around 23.00 euros.

"API2 coal for delivery in Q4 lost some $7 at around $160.50 a metric ton, according to globalCOAL.Crude oil tumbled by more than $4 to $97 a barrel on concerns over the U.S. financial system and signs Hurricane Ike may have spared key U.S. energy infrastructure.

Click here to read more

Source: Reuters