BLBG: Copper Rebounds From Two-Week Drop in London as Stocks Rally
Copper rebounded from a two-week drop in London as shares rose on speculation that the U.S. government will increase its control of Citigroup Inc. Aluminum slid to a six-year low.
The MSCI World Index of stocks added as much as 1.3 percent. The government may raise its holding in Citigroup as high as 40 percent, the Wall Street Journal reported today. Oil, soybeans and sugar also gained, spurring a 1.5 percent increase in the UBS Bloomberg CMCI Index of 26 raw materials.
“Any Citigroup rescue would be positive for the financial sector,” said Andrey Kryuchenkov, an analyst at VTB Capital in London. “Metals will follow equities as sentiment improves.”
Copper for three-month delivery rose $137, or 4.4 percent, to $3,287 a metric ton at 2:37 p.m. on the London Metal Exchange. Prices dropped 11 percent in the past two weeks. Nickel gained $185, or 2 percent, to $9,685 a ton and zinc climbed $15, or 1.4 percent, to $1,120 a ton.
Stockpiles of copper in LME-monitored warehouses fell to 544,650 tons, the second drop in four days. Inventories have climbed 60 percent this year. The metal has support based on analysis of technical charts because it has managed to stay above this year’s low of $3,025 a ton from Jan. 2, said Dhiren Sarin, an analyst at Barclays Capital in London.
“People are looking at opportunities all over,” Sarin said.
Metals Demand
Copper, used in plumbing and electrical wiring, dropped in the past two weeks on concern slumping global growth would slash demand for industrial metals. Some investors have cited U.S. Treasury Secretary Timothy Geithner’s failure to clarify his intentions regarding Citigroup and Bank of America Corp. for hurting the companies’ shares.
Citigroup stock slid 44 percent last week, the biggest retreat in the Dow Jones Industrial Average, and Bank of America’s 32 percent slide was second-largest. Citigroup gained as much as 23 percent today in New York Stock Exchange composite trading.
The LME index of copper, zinc and four other industrial metals has lost 6 percent this year on speculation the slowing world economy will shrink demand. The Federal Reserve last week cut its forecast for the U.S. economy this year, with most officials seeing a contraction of 0.5 percent to 1.3 percent.
Hedge funds and other large speculators increased their bets on lower New York copper prices as of Feb. 17. Their net short position was 27,427 contracts, the most since at least 1993, figures from the U.S. Commodity Futures Trading Commission show.
Aluminum for three-month delivery slipped 0.8 percent to $1,295 a ton, the lowest since October 2002. Tin added $50 to $10,575 a ton, while lead jumped $15 to $1,045 a ton.
