European Union carbon permits had their biggest weekly drop in almost two months amid concern weak economies will discourage efforts to reduce a glut of the contracts in the world’s biggest greenhouse-gas market. Allowances for December fell as much as 3.7 percent today to 5.48 euros ($6.85) a metric ton, the lowest since July 7, on the ICE Futures Europe exchange in London. Permits traded at 5.66 euros at 4:47 p.m., taking the weekly drop to 4.6 percent, the largest since Aug. 8. The next round of talks between EU states on a proposal for a permanent permit reserve will take place Oct. 20, according to two EU diplomats with direct knowledge of the matter. Companies including Luxembourg-based ArcelorMittal, the biggest maker of steel, say higher carbon prices might spur investment outside Europe. A private gauge of euro-area services and manufacturing fell to the lowest in almost a year, data showed today. “The state of the economy isn’t a good signal for an early introduction of the market stability reserve,” Olav Botnen, senior power analyst at Arendal, Norway-based Markedskraft ASA, said today by phone. There’s a chance lawmakers will fail to carry out the plan, “and that’s a bearish signal,” he said. The reserve is intended to help mop up a record glut of carbon contracts. The EU favors starting it in 2021, while Germany, the bloc’s biggest economy, is leading efforts to advance the date to 2018. Markit Economics said today its euro-region composite Purchasing Managers’ Index fell to 52 in September, below the estimate of 52.3 from economists surveyed by Bloomberg. It’s at the lowest level since November. Weaker economic activity curbs carbon emissions, eroding demand for permits. The December carbon contract may drop to 4.50 euros a ton by its expiry date, according to Botnen at Markedskraft. “What we really need is a political signal that there will be an accumulated undersupply before 2030,” he said. “That’s the only way this market will rebound.” http://www.bloomberg.com/