Copper rose to its highest level in more than a week on Tuesday, following other commodities and equities markets higher after Japan's central bank promised unlimited asset buying to boost economic growth.
The Bank of Japan, which has been under intense political pressure to overcome deflation, raised its inflation target to 2 percent and said that from 2014 it would adopt an open-ended commitment to buy assets.
Three-month copper on the London Metal Exchange, untraded in rings, was bid at $8,100, up from $8,055 at the close on Monday. It earlier hit $8,133.25 a tonne, its highest since January 11.
“The main driver today is the announcement out of Japan,” T-Commodity metals consultant Gianclaudio Torlizzi said.
“In the medium and the long term it represents a bullish driver for base metals, because the Bank of Japan and the Federal Reserve are two of the main central banks which will continue to inject a lot of liquidity into the financial markets.”
An unexpectedly strong survey of German sentiment, showing analyst and investor morale at its highest since May 2010, also helped sentiment.
There was also confidence in the steadiness of top metals consumer China's economic recovery, although metals buyers were wary over whether the Chinese will stock up before the week-long Lunar New Year holiday in mid-February.
“We still have to wait and see whether there is restocking ahead of Chinese New Year - the spot market remains the same for now. Demand might pick up at the end of the first quarter because of seasonality,” said Chunlan Li, a Beijing-based copper analyst with consultancy CRU.
Copper stocks in China's bonded warehouses hit a record high of over 1 million tonnes in November, and its refined copper output climbed more than 20 percent in December to a record 580,000 tonnes.
The rising stockpiles and production could dampen China's appetite for spot imports and 2013 term shipments and are likely to weigh on benchmark LME copper prices.
A softer dollar versus a basket of currencies, and against the yen, supported base metals. A weaker dollar makes metals priced in the US currency cheaper for holders of alternative currencies.
ALUMINIUM
China's aluminium production rose almost 24 percent in December. The country is the world's top producer of the metal.
Three-month aluminium was $2,047 per tonne in rings, from a last bid of $2,040.5 on Monday. Lead was $2,319 in rings from a last bid of $2,300, and nickel was $17,405 from $17,380.
LME zinc, untraded in rings, was bid at $2,045 per tonne, from $2031.5 at the close on Monday. Tin, also untraded, was bid at $24,950 from $25,000. - Reuters