RTRS:Copper rises as China's Wen offers euro zone support
(Reuters) - Copper edged higher on Thursday after three straight sessions of losses, buoyed by Chinese Premier Wen Jiabao's support for the euro zone, which helped boost investor confidence in the global economy and the outlook for metals demand.
After meeting German Chancellor Angela Merkel on Thursday, Wen said he was confident the euro zone could pull out of its debt crisis.
He also said China was willing to buy more EU government bonds if it could assess the risks involved, the strongest sign of support for its biggest trading partner in recent months.
"Copper prices started turning around after the meeting between Wen and Merkel. Investors feel reassured," said a Shanghai-based trader with an international firm.
Traders said Wen's comments helped offset some of the bearishness which pervaded the market after China's top planning agency said the economy was slowly stabilizing, dashing hopes for more aggressive stimulus measures by the government.
But major gains are unlikely as investors are waiting for Friday's speech by Federal Reserve Chairman Ben Bernanke, who is expected to provide hints of a third round of quantitative easing at the Jackson Hole, Wyoming, meeting of central banks.
Three-month copper on the London Metal Exchange was up 0.7 percent at $7,630 per tonne by 0818 GMT, snapping three sessions of losses.
The most active December copper contract on the Shanghai Futures Exchange climbed 0.9 percent to 55,680 yuan ($8,800) per tonne, on track to reverse two sessions of losses.
Copper has fallen as hopes for rate cuts or a reduction to bank reserve requirements in China fade as Beijing seems reluctant to resort to blunt monetary policy instruments and is instead experimenting with more delicate tools, such as injecting liquidity into the interbank market.
Physical demand for copper also slackened in China, the world's top consumer of the refined metal.
The premium for China's spot copper price over the prompt September month contract narrowed to 45 yuan on Wednesday, state-backed research firm Minmetal Futures said a note on Thursday. Premiums were at around 100 yuan last week.
The narrowing spread is a sign that the recent spurt of spot purchases by smelters and speculators has failed to prop up the market amid poor demand from copper end-users, traders said.
Separately, China's biggest copper smelter Jiangxi Copper said its first half profit fell 38 percent.
