European carbon jumped by as much as 2% in the final 90 minutes of Thursday’s trading, clawing back lost ground following the weakest auction results recorded in several weeks.

The front-year EUA futures on ICE settled up 4 cents at €5.01, having climbed to an intraday high of €5.02 just before that and dipping to as low as €4.89 following this morning’s government allowance sale.

Trading was on the quiet side, with 8.9 million units changing hands as standard volume on the ICE Dec-16s.

At one point in the afternoon, no trades on the benchmark futures went through over the space of 30 minutes.

An additional 5.8 million units were also transacted as block trades on the Dec-16s, with a further 7.2 million done as blocks between the Dec-18s and 19s.

Earlier in the day, a group of 25 EU member states sold 3.425 million spot EUAs for €4.92 each, in an auction that cleared some 5 cents below the secondary market – the largest discount posted since Feb. 23.

The EEX-hosted sale attracted 20 participants who collectively entered bids worth a total 5.98 million units.  That was also the lowest seen since late February.

Carbon also ignored gains made in the wider energy complex.

Front-month Brent crude was up by 95 cents to $41.28/barrel, while European cal-17 coal futures on ICE added $1.45 to $41.80/tonne and German calendar-year baseload power inched higher on EEX.

The euro surged against the US dollar on the back of reduced expectations regarding multiple interest rate hikes by the American Federal Reserve, but it wasn’t enough to stem dearer coal’s effect on the German clean dark spreads in check.

Meanwhile, EU member states have handed out a further 17.6 million free carbon allowances to industry over the past fortnight, with Italy, Spain and Finland as the only governments to have not yet started the annual process, updated data published late Thursday by the European Commission showed.

By Mike Szabo – mike@carbon-pulse.com