Qt Quick app build fails: [copydeploymentfolders] Error 127

Problem occurs with Qt Creator in Qt SDK 1.1 Tech-preview.

1) Created Qt Quick application using the wizard
2) Building Simulator and Desktop targets fails for [copydeploymentfolders] Error 127

See compiler output below:

Running build steps for project TestApp...
Starting: "c:\qtsdk\desktop\qt\4.7.1\mingw\bin\qmake.exe" C:\Users\Kimmo\Documents\dev\TestApp\TestApp.pro -r -spec win32-g++ QMLJSDEBUGGER_PATH=C:/QtSDK/QtCreator/share/qtcreator/qml/qmljsdebugger
The process "c:\qtsdk\desktop\qt\4.7.1\mingw\bin\qmake.exe" exited normally.
Starting: "C:\QtSDK\mingw\bin\mingw32-make.exe" -w
mingw32-make: Entering directory `C:/Users/Kimmo/Documents/dev/TestApp-build-desktop'
C:/QtSDK/mingw/bin/mingw32-make -f Makefile.Debug
mingw32-make[1]: Entering directory `C:/Users/Kimmo/Documents/dev/TestApp-build-desktop'
g++ -c -g -frtti -fexceptions -mthreads -Wall -DUNICODE -DQT_LARGEFILE_SUPPORT -DNETWORKACCESS -DQT_DLL -DQT_DECLARATIVE_LIB -DQT_GUI_LIB -DQT_CORE_LIB -DQT_HAVE_MMX -DQT_HAVE_3DNOW -DQT_HAVE_SSE -DQT_HAVE_MMXEXT -DQT_HAVE_SSE2 -DQT_THREAD_SUPPORT -DQT_NEEDS_QMAIN -I'c:/QtSDK/Desktop/Qt/4.7.1/mingw/include/QtCore' -I'c:/QtSDK/Desktop/Qt/4.7.1/mingw/include/QtGui' -I'c:/QtSDK/Desktop/Qt/4.7.1/mingw/include/QtDeclarative' -I'c:/QtSDK/Desktop/Qt/4.7.1/mingw/include' -I'../TestApp/qmlapplicationviewer' -I'c:/QtSDK/Desktop/Qt/4.7.1/mingw/include/ActiveQt' -I'debug' -I'../TestApp' -I'.' -I'c:/QtSDK/Desktop/Qt/4.7.1/mingw/mkspecs/win32-g++' -o debug/main.o ../TestApp/main.cpp
g++ -c -g -frtti -fexceptions -mthreads -Wall -DUNICODE -DQT_LARGEFILE_SUPPORT -DNETWORKACCESS -DQT_DLL -DQT_DECLARATIVE_LIB -DQT_GUI_LIB -DQT_CORE_LIB -DQT_HAVE_MMX -DQT_HAVE_3DNOW -DQT_HAVE_SSE -DQT_HAVE_MMXEXT -DQT_HAVE_SSE2 -DQT_THREAD_SUPPORT -DQT_NEEDS_QMAIN -I'c:/QtSDK/Desktop/Qt/4.7.1/mingw/include/QtCore' -I'c:/QtSDK/Desktop/Qt/4.7.1/mingw/include/QtGui' -I'c:/QtSDK/Desktop/Qt/4.7.1/mingw/include/QtDeclarative' -I'c:/QtSDK/Desktop/Qt/4.7.1/mingw/include' -I'../TestApp/qmlapplicationviewer' -I'c:/QtSDK/Desktop/Qt/4.7.1/mingw/include/ActiveQt' -I'debug' -I'../TestApp' -I'.' -I'c:/QtSDK/Desktop/Qt/4.7.1/mingw/mkspecs/win32-g++' -o debug/qmlapplicationviewer.o ../TestApp/qmlapplicationviewer/qmlapplicationviewer.cpp
C:/QtSDK/Desktop/Qt/4.7.1/mingw/bin/moc.exe -DUNICODE -DQT_LARGEFILE_SUPPORT -DNETWORKACCESS -DQT_DLL -DQT_DECLARATIVE_LIB -DQT_GUI_LIB -DQT_CORE_LIB -DQT_HAVE_MMX -DQT_HAVE_3DNOW -DQT_HAVE_SSE -DQT_HAVE_MMXEXT -DQT_HAVE_SSE2 -DQT_THREAD_SUPPORT -DQT_NEEDS_QMAIN -I'c:/QtSDK/Desktop/Qt/4.7.1/mingw/include/QtCore' -I'c:/QtSDK/Desktop/Qt/4.7.1/mingw/include/QtGui' -I'c:/QtSDK/Desktop/Qt/4.7.1/mingw/include/QtDeclarative' -I'c:/QtSDK/Desktop/Qt/4.7.1/mingw/include' -I'../TestApp/qmlapplicationviewer' -I'c:/QtSDK/Desktop/Qt/4.7.1/mingw/include/ActiveQt' -I'debug' -I'../TestApp' -I'.' -I'c:/QtSDK/Desktop/Qt/4.7.1/mingw/mkspecs/win32-g++' -D_GNUC_ -DWIN32 ../TestApp/qmlapplicationviewer/qmlapplicationviewer.h -o debug/moc_qmlapplicationviewer.cpp
g++ -c -g -frtti -fexceptions -mthreads -Wall -DUNICODE -DQT_LARGEFILE_SUPPORT -DNETWORKACCESS -DQT_DLL -DQT_DECLARATIVE_LIB -DQT_GUI_LIB -DQT_CORE_LIB -DQT_HAVE_MMX -DQT_HAVE_3DNOW -DQT_HAVE_SSE -DQT_HAVE_MMXEXT -DQT_HAVE_SSE2 -DQT_THREAD_SUPPORT -DQT_NEEDS_QMAIN -I'c:/QtSDK/Desktop/Qt/4.7.1/mingw/include/QtCore' -I'c:/QtSDK/Desktop/Qt/4.7.1/mingw/include/QtGui' -I'c:/QtSDK/Desktop/Qt/4.7.1/mingw/include/QtDeclarative' -I'c:/QtSDK/Desktop/Qt/4.7.1/mingw/include' -I'../TestApp/qmlapplicationviewer' -I'c:/QtSDK/Desktop/Qt/4.7.1/mingw/include/ActiveQt' -I'debug' -I'../TestApp' -I'.' -I'c:/QtSDK/Desktop/Qt/4.7.1/mingw/mkspecs/win32-g++' -o debug/moc_qmlapplicationviewer.o debug/moc_qmlapplicationviewer.cpp
g++ -enable-stdcall-fixup -Wl,-enable-auto-import -Wl,-enable-runtime-pseudo-reloc -mthreads -Wl -Wl,-subsystem,windows -o debug/TestApp.exe debug/main.o debug/qmlapplicationviewer.o debug/moc_qmlapplicationviewer.o -L'c:/QtSDK/Desktop/Qt/4.7.1/mingw/lib' -lmingw32 -lqtmaind -lQtDeclaratived4 -lQtGuid4 -lQtCored4 -LC:\OpenSSL-Win32_full\lib
Copying application data...
mingw32-make[1]: Leaving directory `C:/Users/Kimmo/Documents/dev/TestApp-build-desktop'
mingw32-make: Leaving directory `C:/Users/Kimmo/Documents/dev/TestApp-build-desktop'
/usr/bin/sh: xcopy: command not found
mingw32-make[1]: *** [copydeploymentfolders] Error 127
mingw32-make: *** [debug] Error 2
The process "C:\QtSDK\mingw\bin\mingw32-make.exe" exited with code 2.
Error while building project TestApp (target: Desktop)
When executing build step 'Make'