LONDON: Copper rose more than 1 percent on Thursday, after encouraging housing and labour market data from the United States boosted optimism about the pace of recovery in the world's largest economy and bolstered the outlook for metals demand.
Figures showed the number of Americans filing new claims for unemployment benefits tumbled to a five-year low last week, while separate data showed a surge in residential construction last month, suggesting the housing market was now positioned to support the economy's recovery this year.
This helped lift the metal used in power and construction to session highs, with benchmark copper prices on the London Metal Exchange rising to an intraday high of $8,065 a tonne. It ended at $8,054 a tonne, up 1.3 percent from Wednesday's close of $7,946.
"The way things are going at the minute, the US housing market looks to be one of the best parts of the US economy," said Nic Brown, head of commodities research at Natixis.
"It looks to us like a large inventory cycle is finally turning in favour of a tighter US housing market which therefore requires more new houses to be built. It's a cycle which will boost activity and boost credit creation."
US stocks hit a five-year high at the open after the data, while the dollar was weak against the euro
A weak dollar makes commodities priced in the US unit cheaper for holders of other currencies.
Copper prices hit their highest level in more than two months earlier in January following a deal by U.S lawmakers to avoid a "fiscal cliff" of spending cuts and tax increases.
But prices have since retreated on fears the US Federal Reserve may rein in easing measures sooner than expected and caution ahead of upcoming US debt ceiling negotiations.
Keeping gains in check was uncertainty about the outlook for demand from top metal consumer China, where traders and analysts expect buying to remain subdued until after the week-long Lunar New Year holiday in mid February.
While a Reuters poll showed China's annual economic growth is forecast to have quickened to 7.8 percent in the fourth quarter, the recovery is likely to be tepid and the economy may need continued policy support.
"As the year progresses I think what you'll start to see is that the upturn in Chinese economic growth will not feed through into sustained strength in commodities demand," Ross Strachan, an economist at Capital Economics, said.
"The double digit growth rates we have seen (in China) in the past is not likely to return."
Decreased appetite for copper in China is evident in official statistics, which showed that December imports fell after a year spent accumulating stockpiles of the metal.
Analysts estimate copper stocks in bonded warehouses in China are at around 800,000-900,000 tonnes, or three times the amount currently held in London Metal Exchange (LME) warehouses.
At the same time mine production is improving, with Credit Suisse seeing growth of 5-6 percent this year.
This is also being reflected in rising fees for smelters, which have gained the upper hand in negotiations over processing fees with miners this year.
Japan's biggest copper smelter, Pan Pacific Copper, and China's top smelter, Jiangxi Copper, have won rises of more than 10 percent in copper concentrate treatment and refining charges from major miners, company sources said, reflecting a recovery in copper mine supply after years of deficit.
Global miners pay TC/RC to smelters to convert concentrate into refined metal, with the charges deducted from the sale price, based on LME copper prices. Higher charges are typically seen when concentrate supply rises or smelter capacity thins.
In other metals benchmark aluminium ended at $2,048.50 a tonne from Wednesday's close of $2,045. Tin climbed to a fresh 11-month intraday high at $25,525, before ending at $24,920 from $24,995.
Lead closed at $2,285 from $2,266 on Wednesday and nickel ended at $17,600 from $17,400. Zinc closed at $2,010 from a last bid of $1,979 on Wednesday.