SINGAPORE: London copper rose on Monday after data showed China's factory output growth accelerated to eight-month highs in November, but lingering worries that the euro zone may return to recession next year dragged on the euro and kept a lid on gains.
Signs of renewed vigour in China's factories have brightened the demand outlook for industrial metals, while glimmers of improvement from sectors of the US economy, such as housing and jobs, are also acting to underpin prices. China is the world's top consumer of metals.
"We've been gathering signs that things in China are going to stabilise and hopefully improve in the year ahead. So the outlook is looking a little bit more favorable for industrial metals," said Alexandra Knight, an economist with National Australia Bank in Melbourne.
"For the United States there's still the fiscal cliff which, in the short term, could create some headwinds plus...there is no doubt the weakness in Europe will have impact on trade and also on the euro...which affects metals," she added.
Three-month copper on the London Metal Exchange rose 0.62 percent to $8,084.75 a tonne by 0341 GMT, extending small gains from the previous session, when it logged a fourth week of gains in a row. Prices earlier hit $8,090, close to a two-and-a-half month peak of $8,095.75 a tonne hit on Dec. 5.
Copper has gradually gained steam since mid-November on prospects of improvement in China's economy and hopes for a resolution of the looming expiry of $600 billion in US tax cuts and spending increases which could tip the world's top economy back to recession.
The most-traded March copper contract on the Shanghai Futures Exchange rose 0.75 percent to 57,880 yuan ($9,300) a tonne.
A pick-up in China's factory output and retail sales growth to eight-month highs suggested a revival in the world's second-biggest economy is gaining momentum but optimism was trimmed by November exports that were well below market expectations.
Exports rose an anaemic 2.9 percent while imports were flat year-on-year.
A bright spot in the US labour market came with a jobs report on Friday that showed US companies kept up their slow but steady hiring pace in November, defying predictions for Superstorm Sandy to have dealt the number a big blow.
Still, the euro had retreated from last week's one-month peaks against the dollar after Germany's central bank forecast barely any economic growth in 2013, and flagged risks of a recession in the euro zone's biggest economy as the debt crisis hits the bloc's core.
A weaker euro makes commodities more expensive for holders of other currencies.
Center>Copyright Reuters, 2012
Comments
Comments are closed.