RTRS:METALS-LME copper rises on lean volumes ahead of EU summit
* LME copper up 1.3 pct, big expectations from EU summit
* Geithner says supports EU treaty overhaul plan
* Coming Up: France's Sarkozy meets with Geithner
(Updates prices)
By Manolo Serapio Jr
SINGAPORE, Dec 7 (Reuters) - London copper futures
edged higher on Wednesday, spurred by hopes that more aggressive
measures to end the euro zone debt crisis will be reached at
this week's EU summit, but thin volumes suggest the optimism is
not widespread.
The euro zone debt crisis has been the biggest pain for
copper and other commodities this year because it clouded the
outlook for global demand. So investors have huge expectations
about Friday's summit which may be Europe's last chance to
resolve a crippling two-year-old sovereign debt crisis.
"There is a lot riding on the outcome of this week's
upcoming EU meeting," INTL FCStone analyst Edward Meir said in a
note.
"In our view, for the markets to advance further from here,
investors will not only need to see a set of robust fiscal
principles introduced, but ones that could be easily measured,
along with credible repercussions imposed on members that stray
from these provisions."
U.S. Treasury Secretary Timothy Geithner is meeting with
French President Nicolas Sarkozy in Paris on Wednesday to press
for decisive steps to resolve the euro zone debt crisis.
Geithner has thrown his support behind France and Germany's
plan to change the EU treaty to impose mandatory penalties on
euro zone states that exceed deficit targets in a bid to restore
market trust. But Geithner said the European Central Bank had to
play a major role.
Meir at INTL FCStone agrees that the ECB, which is expected
to announce a rate cut on Thursday and offer liquidity to
support banks, should have a key role in the solution.
"If they don't, we could see much of the recent gains in a
number of markets get rolled back, as markets will not place too
much faith in political proclamations alone," said Meir.
Standard & Poor's said a plan by France and Germany to
increase fiscal integration in Europe is "promising" and could
help avoid a mass debt downgrade of euro zone countries, a day
after warning that it could downgrade nearly all euro zone
members, including top-rated countries such as Germany and
France, if leaders fail to reach an agreement on how to solve
the region's debt crisis.
Three-month copper on the London Metal Exchange rose
1.3 percent to $7,933 a tonne by 0704 GMT, recouping Tuesday's
losses. Volume on LME Select was a modest 1,949 lots, less than
half of the usual turnover during Asian hours.
Despite the gain, LME copper is still down 17 percent this
year, and is headed for its first annual decline since 2008 when
a financial crisis tripped the global economy, with demand from
top copper consumer China also far from aggressive.
A Chinese commerce ministry official said the world's No. 2
economy will face a "severe export situation" in 2012 and will
try to export more to emerging markets.
A slowing global economy may prod China to wrap up a
three-year plan to build stockpiles of base metals with prices
rising and Beijing still fighting inflation, industry sources
and analysts in China said.
The most-traded February copper contract on the Shanghai
Futures Exchange gained 1.2 percent to close at 58,360
yuan a tonne.
Apart from the EU summit, investors were also waiting for a
slew of China data on Friday for trading cues, hence the thin
volumes, said a metals trader in Shanghai.
China is scheduled to release inflation, industrial output
and commodity production data, among others on Friday.
Base metals prices at 0704 GMT
Metal Last Change Pct Move YTD pct chg
LME Cu 7933.00 98.00 +1.25 -17.36
SHFE CU FUT FEB2 58360 690 +1.20 -18.78
LME Alum 2120.00 7.00 +0.33 -14.17
SHFE AL FUT FEB2 16195 25 +0.15 -3.83
HG COPPER MAR2 360.85 3.30 +0.92 -18.72
LME Zinc 2042.00 -3.00 -0.15 -16.79
SHFE ZN FUT MAR2 15850 160 +1.02 -18.61
LME Nickel 18410.00 -35.00 -0.19 -25.62
LME Lead 2136.00 11.00 +0.52 -16.24
SHFE PB FUT 15745 140 +0.90 -14.20
LME Tin 20272.00 -28.00 -0.14 -24.64
LME/Shanghai arb 594
Shanghai and COMEX contracts show most active months
^ LME 3-m copper in yuan, including 17 pct VAT, minus SHFE third month
