Copper gains on outlook

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CopperMine REUTERS

Copper rose on Monday following manufacturing surveys from the United States and top consumer China which boosted optimism about the pace of economic recovery, with a strong euro also helping lift metals prices.

Three-month copper on the London Metal Exchange rose to $7,744.75 a tonne at 12:51 SA time, up 0.7 percent from Thursday's close of $7,692 a tonne.

China's manufacturing sector saw expansion accelerate in November for the first time in 13 months, preliminary results from a factory survey showed, a sign that the pace of economic growth has revived after seven consecutive quarters of slowdown.

That followed data showing U.S. manufacturing grew in November at its quickest pace in five months, with a rise in domestic demand hinting that factories could provide a boost to economic growth in the fourth quarter.

Trading volumes, however, are expected to remain light due to the Thanksgiving holiday in the United States.

“Any support for copper today will have quite a lot to do with China ... it was another data point that suggests that, at last, things are starting to get better,” said Nic Brown, head of commodities research at Natixis.

He expected prices to rise further in 2013, partly thanks to positive signs in the US housing market.

“Our forecast for copper prices expect an average of about $8,500 a tonne in 2013. We would expect a peak in prices in the first half of the year since supply will gradually improve as we get closer to 2014,” Brown added.

Also helping lift prices was a strong euro, which rose on hopes that a Greek funding deal would eventually be agreed. It hit a two-week high against the dollar.

German Chancellor Angela Merkel said on Wednesday an agreement to release aid to Athens was still possible next Monday, helping the euro recover after Greece's international lenders had earlier failed to reach a deal.

Data showing manufacturing activity in the euro zone slowed less than expected in November also helped the single currency

A weak dollar makes commodities priced in the US unit cheaper for holders of other currencies.

 

EURO ZONE EYED

Analysts said concerns about the euro zone debt crisis remained despite the positive news on Greek aid, with an EU summit this week in Brussels likely to be closely watched by the market.

“Despite the positive tone from Greece aid efforts after German Chancellor Merkel said a deal could be reached in coming weeks, our economists suggest there is yet to be any meaningful progress by EU Finance Ministers on the nation's fiscal problems and deep divisions among EU nations remain,” ANZ analysts said in a note.

Spain will also start tapping markets to cover its 2013 financing needs, a burden many investors think will eventually force it to seek aid from its euro zone partners.

Copper prices, which were up 10 percent on the year in September, have fizzled on slowing global growth and now stand less than 2 percent higher than the start of 2012.

Barclays will cease floor trading operations on the London Metal Exchange (LME) with immediate effect, the exchange said on Thursday.

Battery material lead rose to $2,159.25 a tonne from Wednesday's close of $2,150 while soldering metal tin rose to $20,550 from $20,425.

Stainless-steel ingredient nickel rose to $16,816 from $17,000, zinc, used in galvanising, was at $1,923.50 from Thursday's close of $1,917 while aluminium climbed to $1,940 from $1,930. - Reuters



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