RTRS:METALS-Copper climbs to two-week high after ECB injection
* ECB allotted 529.531 bln euros in LTRO
* Copper up 14 pct in year to date
* Coming up: U.S. GDP, 1330 GMT
By Harpreet Bhal
LONDON, Feb 29 (Reuters) - Copper prices rallied to a more than
two-week high on Wednesday after banks snapped up more than 500 billion in cheap
funding from the European Central Bank aimed at injecting liquidity into the
market, helping risky assets push higher.
Three-month copper on the London Metal Exchange traded at $8,650 a
tonne by 1054 GMT, up 0.6 percent from Tuesday's close of $8,600 a tonne.
It earlier hit a session high at $8,695.25, its highest level since February
10.
Banks took 530 billion euros at the European Central Bank's second offering
of three-year funds, slightly above forecasts, fuelling hopes that more credit
will flow to businesses and government borrowing costs will ease further.
"This was the key event for the day and the result was within expectations
helping support base metals and equity markets have also pushed higher," said
Andrey Kryuchenkov, analyst at VTB.
"There is potential we will see more liquidity boosts in Europe."
The funding operation helped European shares push higher, while German
bunds fell. The euro, however, dipped to a session low against the dollar in
volatile trade.
A strong dollar makes dollar-priced commodities cheaper for holders of other
currencies.
CHINA DEMAND WORRIES
The metal used in power and construction has risen almost 14 percent so far
this year, and is on course for a second month of gains in February after
hitting a five-month top of $8,765 early in the month.
But analysts say demand from top consumer China needs to bounce back to
justify the metal moving higher.
Soft physical premiums for copper in Shanghai reflect continued weakness in
Chinese demand, with a Shanghai-based trader saying premiums for cash copper
have slipped to between $40-$70 per tonne over London prices from around $80-$90
earlier this month.
Copper stocks in warehouses monitored by the LME fell by a further 2,425
tonnes to 296,425 tonnes - a fresh 2-1/2 year low. The ratio of cancelled
warrants, material earmarked for delivery, to total stock stood at 31.69
percent, mostly in U.S. locations.
In contrast, stockpiles of copper at warehouses monitored by the Shanghai
Futures Exchange remained near 10-year highs despite a drop last
week for the first time since early December.
China is the world's biggest consumer of metals, accounting for around 40
percent of refined copper demand last year. Demand from the country has been
slow to pick up since its Lunar New Year holidays in late January, but some
bright spots in macroeconomic indicators may help support copper prices.
"The recent improvement in Chinese manufacturing activity coupled with the
selective monetary easing stance of the People's Bank of China(PBoC) may help to
spark Chinese buying again and provide the needed catalyst for copper to stage
the next leg higher," Credit Suisse said in a note.
In industry news, a stoppage at Freeport McMoRan Copper & Gold Inc.'s
Grasberg mine in Indonesia could be resolved within days, with talks
between workers and management progressing well, a union official said on
Wednesday.
In other metals, battery material lead was at $2,277.25 from
Tuesday's close of $2,255 a tonne and aluminium was at $2,348 from
$2,325.
Tin rose to $24,185 from $24,055, while zinc rose to
$2,146.25 from $2,123. Nickel climbed to $20,150 from $19,755.
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 393.85 1.95 +0.50 444.70 -11.43
LME Alum 2347.25 22.25 +0.96 2470.00 -4.97
LME Cu 8643.25 43.25 +0.50 9600.00 -9.97
LME Lead 2273.50 18.50 +0.82 2550.00 -10.84
LME Nickel 20091.00 336.00 +1.70 24750.00 -18.82
LME Tin 24150.00 95.00 +0.39 26900.00 -10.22
LME Zinc 2144.25 21.25 +1.00 2454.00 -12.62
SHFE Alu 16250.00 -20.00 -0.12 16840.00 -3.50
SHFE Cu* 61070.00 10.00 +0.02 71850.00 -15.00
SHFE Zin 16140.00 15.00 +0.09 19475.00 -17.12
** Benchmark month for COMEX copper
* 3rd contract month for SHFE AL, CU and ZN
SHFE ZN began trading on 26/3/07
