BLBG: Copper Rises to Three-Week Peak in London as Equities Advance
Copper rose to a three-week peak in London, gaining as equities climbed on speculation that U.S. banks may need less capital than expected. Tin advanced to the highest in almost six months.
The MSCI World Index of shares gained for a seventh day. Indications are that today’s release of results from Federal Reserve stress tests on the 19 biggest lenders will show “no horrors revealed,” Nick Moore, an analyst at RBS Global Banking & Markets in London, said by telephone.
“The stress test is having an effect on global markets,” he said. “It is all feeding through into an absolute bonanza for commodities. There is a lot of fund activity.”
Copper for delivery in three months rose as much as $94, or 2 percent, to $4,844 a metric ton on the London Metal Exchange, the highest intraday price since April 16. The contract was at $4,835 at 10:32 a.m. local time. Copper for July delivery added 1.2 percent to 2.2125 cents a pound in electronic trading on the New York Mercantile Exchange’s Comex unit.
Prices also gained as inventories of metal in LME-monitored warehouses dropped today after rising yesterday for the first time in 17 sessions. Stockpiles fell 2 percent to 393,900 tons.
Companies in the U.S. cut fewer jobs in April, indicating the worst of the recession’s job losses may have passed, figures from ADP Employer Services showed yesterday. Also yesterday, China’s central bank said the country’s economy turned in a better-than-expected first-quarter performance.
Copper Forecast
“Investor sentiment appears to be shifting from whether there will be any economic recovery to what shape the recovery will be,” Nomura Holdings Inc. said in a report. Copper, viewed by some analysts as a growth indicator because of its use in pipes and wiring, is the bank’s preferred commodity.
The metal for immediate delivery will average $4,172 a ton in 2009, rising to $4,960 next year, Nomura said. Copper closed at $4,743 yesterday on the spot market.
Tin for three-month delivery advanced as much as $844, or 6.3 percent, to $14,249 a ton, the highest intraday price since Nov. 12. The contract was recently at $14,200 and has gained 14 percent this week, heading for its biggest weekly advance since the week ended Jan. 2.
Traxys SA, a Luxembourg-based metals investor, said on May 4 it would stop buying tin from eastern Democratic Republic of Congo. The country supplies about 6 percent of the world’s tin, according to U.K.-based industry group Itri Ltd. Tin is used to prevent corrosion in other metals and to make alloys such as bronze and pewter.
Among other LME metals for three-month delivery, zinc added as much as 2.4 percent to $1,638 a ton, the highest intraday price since Oct. 2. It was recently at $1,634.
Aluminum rose 1.9 percent to $1,600 a ton after touching $1,603.75, the highest intraday price since Jan. 7. Nickel added 5.5 percent to $13,400 a ton, and lead gained 3.4 percent to $1,501 a ton.
