Copper rose on Friday as hopes that Greece is now close to securing a second bailout boosted market sentiment but the metal was still on track for its second weekly loss running, reflecting scarce demand from top consumer China.

Benchmark copper on the London Metal Exchange was at $8,363 a tonne by 11:54 SA time up almost 1 percent from Thursday's close of $8,300.

Investors were more prone to taking risk as optimism grew that Greece has finally done enough to secure a second bailout after it set out extra budget savings.

“Hopes of financial assistance for Greece are driving the market; the market is quite optimistic today but the recovery is fragile and we should be prepared to see lower prices,” said Commerzbank analyst Daniel Briesemann.

“If you take a look at China you can see a continuous build-up in inventory levels which shows that demand is cooling down a little bit in China.”

Copper inventories in warehouses monitored by the Shanghai Futures Exchange rose 9.6 percent to 217,142 tonnes this week, the highest since mid-2002, weekly data released by the exchange showed on Friday.

Evidence of sustained recovery momentum in the US economy however, supported market sentiment.

US data on Thursday showed jobless claims falling to a near four-year low, solid growth in factory activity in the Mid-Atlantic area and a faster-than-expected rise in housing starts.

Also helping copper, the dollar softened against a basket of currencies.

A weaker US currency makes dollar-denominated commodities such as copper more affordable for holder of other currencies.

CHINA DEMAND

Scarce appetite for the red metal from top consumer China is clouding demand prospects for the metal used in power and construction.

China consumes about 40 percent of the global copper supply.

“The passing of the early China New Year break has revealed thin markets for copper and no great benefactors in the form of the Chinese consumer,” Credit Suisse said in a research note.

“Although one market participant we spoke to had described the current physical market conditions as horrible, most observers agree that consumers are generally holding back in expectation of better bargains ahead on prices.”

Falling copper inventories in LME-monitored warehouses however were pointing to stronger demand especially in the US

Stocks fell by 4,750 tonnes to a fresh 2-1/2 year low of 306,375 tonnes, latest data showed.

In other metals, aluminium was at $ 2,173 from $ 2,160 .

A recent surge in imports of primary aluminium by China, the world's top producer and consumer of the metal, could hit a wall in April as weak domestic prices drive traders to cut new orders for spot metal, trading sources said on Friday.

Tin was at $24,000 from $24,005 while zinc, used in galvanising was at $1,985.25 from $1,978 Thurs day's close.

China has raised a resource tax on iron, tin, molybdenum, magnesium, talc, and boron in a move aimed at conserving resources and curbing pollution, an official newspaper said.

Battery material lead was at $2,033.25 from $2,015 and nickel was at $20,100 from $19,900. - Reuters