NEW YORK (Dow Jones)--Copper futures roared up almost 3% amid relief that euro-zone finance ministers passed a second bailout package for Greece and as markets continue to price in China's loosening measures.
The most actively traded contract, for March delivery, was recently up 10.55 cents, or 2.9%, at $3.8135 a pound on the Comex division of the New York Mercantile Exchange.
Europe agreed on an ambitious EUR130 billion rescue deal on Tuesday, which will see private creditors take larger losses in order to put Greece on a path to a sustainable debt load and avert a catastrophic default. The deal will still leave Greece with a massive debt burden, and the country continues to face implementation challenges.
"While the market had been expecting a resolution as late as yesterday, the enormity of putting the situation to rest for at least a while will greatly help sentiment in the medium term," said traders at RBC Capital Markets.
Comex, which was closed in observance of Presidents Day holiday on Monday, is also playing catch-up to China's weekend decision to loosen credit availability. The People's Bank of China on Saturday announced a 50-basis point cut to bank reserve requirements. The credit loosening measures are aimed at boosting business activity and are considered a sign that Beijing is more concerned with restarting growth than curbing incessantly high inflation.
China is the world's largest consumer of copper and traders closely watch the country's economic and fiscal policy for any shifts that affect future demand for the metal. Copper is widely used in construction and manufacturing as it easily conducts electricity and doesn't rust when exposed to water.
Elsewhere, operations at the world's third-largest copper mine, Chile's Done Ines de Collahuasi, were halted Tuesday following a fatal accident at the mine's concentrator plant, a spokeswoman said. Operations won't resume until an investigation into the accident is completed. Collahuasi is controlled by Anglo American PLC and Xstrata PLC.
