SG:London copper bounces from 3 week lows on rising risk appetite
Business Recorder reported that London copper climbed from three week lows hit the session before as merger activity in the United States and strong German business morale boosted stock markets and stoked risk appetite. But physical trade from top consumer China remained quiet, with some industry yet to return to the market suggesting prices may have further to fall.
Three month copper on the London Metal Exchange rose 0.50% to USD 8,090 per tonne by 0258 GMT, reversing losses of nearly 1% in the previous session when it hit a three week low of USD 8,038 per tonne. The most traded May copper contract on the Shanghai Futures Exchange slipped 0.24% to CNY 58,750 per tonne. It earlier fell to its lowest since January 29 at CNY 58,620 per tonne.
Ms Chunlan Li a Beijing based analyst with metals consultancy CRU said that Chinese traders, already worried about fresh curbs on property markets, returned from the Lunar New Year break this week to find LME copper had not made any gains, encouraging further copper sales.
Ms Li said that "For the physical market, I expect demand will remain quiet until next week because many downstream users like copper cable manufacturers and small copper rod producers have not come back to work. Only after the Lantern Festival will it pick up."
China accounts for around 40% of refined demand. China's Lantern Festival falls on January 24 and marks the end of the lunar new year festivities. Shanghai stocks reversed early losses on Wednesday to trade little changed after falling for two days.
More broadly in Asia, shares edged higher on Wednesday, buoyed by rising global equities overnight on an improving global economic outlook while the yen resumed its decline.
US stockmarket indices were close to all-time highs with cheer brought on by this year's ongoing surge in merger activity which signals investors were still finding value in the market.
Office Depot Inc, the No 2 US office supply retailer and smaller rival OfficeMax Inc are said to be in advanced merger talks. Also, optimism that the worst of the euro zone debt crisis was now over has helped German investor and analyst sentiment soar to its highest level in nearly three years this month.
Mr Ed Meir metals analyst at INTL FC Stone said that "The short term focus on the markets will now centre on the Fed policy minutes and the Italian elections scheduled for this weekend. We are also watching the upcoming March 1 deadline here in the US at which point automatic spending cuts could kick in if no budget agreement is reached."
Mr Barack Obama President of India renewed pressure on congressional Republicans to head off budget cuts that are due to begin on March 1 staging a White House appearance with emergency workers to illustrate jobs he said were at risk.
