RTRS: METALS-Copper near one-week high, Europe steps reassure
By Harpreet Bhal
LONDON, Oct 6 (Reuters) - Copper rose to its highest in nearly a week on
Thursday as investors were reassured by European policymakers' supportive
comments on the financial sector, and a weak dollar also helped cement gains for
industrial metals.
Benchmark copper on the London Metal Exchange (LME) rose to $7,184.75 a
tonne, its highest since Sept. 30 and up around 5 percent from Wednesday's close
of $6,820 a tonne. At 1057 GMT, the metal used in power and construction was
trading at $7,131 a tonne.
German Chancellor Angela Merkel said on Wednesday Berlin was ready to
recapitalise its banks if needed, while the European Union's executive is
proposing that member states carry out a coordinated recapitalisation of banks
in the face of mounting concerns about a Greek default.
A fall in the dollar against the euro also helped cement gains, with the
dollar slipping against a basket of currencies. A weak dollar makes commodities
priced in the U.S. unit cheaper for holders of other currencies.
"We have seen a slight move higher in the euro/dollar and improvement in
risk appetite, which is driving the market," said Christin Tuxen, analyst at
Danske Bank.
"We have had a major selloff in copper prices and we are at levels that are
close to marginal costs. We need prices at decent levels in order to ensure
investments in long-term supplies so we might soon be bottoming out in the
copper market.
Highlighting a recovery in investor sentiment, European stocks rose sharply
while German government bonds fell.
The market is likely to focus on a policy decision by the European Central
Bank at 1145 GMT. The central bank is expected to resume longer-term lending to
banks and is also set to prepare the ground for a rate cut before year-end,
although bets on a 50 basis point cut on Thursday have been scaled back after
inflation jumped last month.
The Bank of England voted on Thursday to buy 75 billion pounds more in
assets to shield Britain's economy from the euro zone debt crisis and keep the
faltering recovery going.
INDONEDIAN STRIKE
Freeport McMoRan Copper & Gold Inc's union on Thursday extended a
strike at a massive gold and copper mine in Indonesia's remote Papua province to
Nov. 15, an official said.
Chief Executive Richard Adkerson said on Wednesday the company was unable to
make up a production shortfall from strikes in Peru and Indonesia as it already
operates at full capacity.
Copper prices were also expected to get a boost in the coming week when
exchanges in China re-open after week-long national holidays. The lack of buying
from the Asian nation has capped gains, traders said.
Copper prices added to small gains in the previous session. On Monday it
fell to a 14-month low of $6,636 a tonne.
"We would allow for a short-term rally into the $7,406/7,884 band. This is
the location of the 23.6 percent and 38.2 percent retracements of the sell off.
Rallies should remain capped by the $8,504 May low," Commerzbank technical
analysts said in a note.
Aluminium rose to $2,196.50 a tonne from Wednesday's close of
$2,170. LME data showed a fall of 4,850 tonnes of the metal mostly from
LME-registered warehouses in Detroit.
Copper stocks fell by 3,200 tonnes, according to data from the LME.
Tin rose to a one-week high of $21,800 a tonne from Wednesday's
close of $21,100. Zinc , used in galvanising, traded at $1,880 from
$1,845 on Wednesday.
Battery material lead rose to $1,930 from $1,892 while nickel
rose to $18,771 from $18,400.
Metal Prices at 1057 GMT
Comex copper in cents/lb, LME prices in $/T and SHFE prices in yuan/T
Metal Last Change Pct Move End 2010 Ytd Pct
move
COMEX Cu 322.80 12.70 +4.10 444.70 -27.41
LME Alum 2191.50 21.50 +0.99 2470.00 -11.28
LME Cu 7130.25 310.25 +4.55 9600.00 -25.73
LME Lead 1926.50 34.50 +1.82 2550.00 -24.45
LME Nickel 18766.00 366.00 +1.99 24750.00 -24.18
LME Tin 21653.00 553.00 +2.62 26900.00 -19.51
LME Zinc 1873.00 28.00 +1.52 2454.00 -23.68
SHFE Alu 16640.00 165.00 +1.00 16840.00 -1.19
SHFE Cu* 54790.00 2190.00 +4.16 71850.00 -23.74
SHFE Zin 15400.00 715.00 +4.87 19475.00 -20.92
** Benchmark month for COMEX copper
* 3rd contract month for SHFE AL, CU and ZN
SHFE ZN began trading on 26/3/07
