Copper at 4-month peak as global growth outlook brightens

SINGAPORE: Copper futures in London and Shanghai rallied to four-month peaks on Monday, boosted by brightening prospects for global demand after a string of reports last week showed industrial activity ramping up in the world's top two economies.

US manufacturing growth quickened in January and hiring across the economy increased in late 2012, while Chinese factories extended a modest rebound, suggesting a global economic recovery remains on track.

Monetary easing plans announced by the US Federal Reserve on Friday also buoyed risk appetite in the Asian timezone, lifting metals.

"Of course improving European and US data will be helping investor confidence, but China accounts for the biggest share of real demand. I have full confidence that copper prices will surprise on the upside between now and the end of May," said analyst Judy Zhu of Standard Chartered in Shanghai.

"People are preparing for better order books than this time a year ago - there are signs of a pick up in property construction, for example. Chinese demand will be quite good after the Lunar New Year."

The most active May contract on the Shanghai Futures Exchange climbed to 60,080 yuan ($9,600) a tonne, its loftiest since Sept. 21. ShFE copper traded at 59,970 a tonne at 0252 GMT, up 0.79 percent from Friday.

Meanwhile, LME copper hit $8,346 a tonne, a peak since Oct. 5, before easing to $8,302.50. But that was still up 0.15 percent from the previous session, when it saw its biggest weekly gain since September at 3.2 percent.

Also on the LME, three-month zinc and nickel were nearing respective one-year tops above $2,187.25, zinc's peak from Jan. 3, and $18,920, nickel's high from October 2.

Numbers on Friday suggesting the worst of the euro zone's downturn may be over also buoyed sentiment.

Elsewhere, growth in China's increasingly important services sector rose for the fourth straight month in January, though the slim increase added to evidence that the recovery in the world's second-largest economy remains a modest one.

Markets in China, which accounts for 40 percent of refined copper demand, will be closed next week for its new year holiday celebrations.

"For copper, technical traders will now be looking for a test of the September high of $8,422 before making a charge at the 2012 high of $8,765," RBC Capital said in a note.

"We think the market will now look to the Chinese to confirm the recent trend, but they are unlikely to appear as buyers until after the Lunar New Year Holidays," it added.