LONDON: Copper climbed for a second session on Wednesday on expectations that the U.S. housing sector will show further signs of revival in data due later while aluminium hit new two-and-a-half-year highs.
Three month copper on the London Metal Exchange traded at $9,475 in official rings, up from a close of $9,340 a tonne on Tuesday.
Copper, which is used in power and construction, had fallen to a one-month trough at $9,207 a tonne on Monday.
"The LME complex is trading higher as improved economic data in the U.S. and Europe adds to the impact of good earnings reports for the first quarter," Citi analyst David Thurtell said.
U.S. government data on Tuesday showed housing starts and permits for future home construction rose more than expected in March, raising prospects that consumption in the world's second major market for metals was gathering pace.
The U.S. National Association of Realtors (NAR) releases existing home sales for March at 1400 GMT, Economists in a Reuters survey forecast a 5.00 million annualised unit total versus 4.88 million in February.
An LME ring trader said the red metal was boosted by macro sentiment but for now had run into chart resistance at the 100-day moving average near $9,500, which was proving a short term barrier for prices.
Derived from prices, moving averages are chart signals often watched by traders for signals to buy or sell.
In broader markets, risk sentiment also improved, underpinning investor appetite for the metals.
Upbeat U.S. and European corporate earnings helped soothe market sentiment, which had been roiled at the start of the week when rating agency S&P warned it could cut the United States' sovereign credit rating and as speculation intensified that Greece would need to restructure its debt.
While dollar weakness was aiding the metals' advance on Wednesday, on a longer term horizon it was likely to create headwinds for the metals as sovereign debt dragged on the single currency, said Andrey Kryuchenkov at VTB Capital.
"In Europe, they're persistently hawkish, but there is massive concern regarding peripheral debt the dollar has a big chance of rebounding in the second half of the year."
The euro bounced off a two-week low, with business activity data from France and Germany supporting expectations that the European Central Bank will continue lifting interest rates, boosting the single currency's yield advantage over the dollar.
A weaker dollar makes commodities cheaper in other currencies.
ALUMINIUM HITS FRESH HIGIHS
Aluminium, which is used in transport, packaging and construction, has been boosted by rising power prices, which account for about 35 percent of aluminium smelting costs.
A Chinese directive to pare back new smelting plants may also have helped fuel its advance, Citi's Thurtell said.
"The aluminium market has hit new highs for the cycle as the LME complex lifts and as Beijing looks to limit new capacity in the domestic aluminium industry," he said.
China on Wednesday, in a circular posted on a government website, called on central and provincial authorities to stop approving the construction of new aluminium smelting capacity
"(The move) limits the probability of Chinese expansions taking the world into chronic oversupply," he said.
"The authorities are concerned that artificial tightness induced by financing/rent deals in the Western world could encourage over-expansion and an eventual bust."
China accounted for around two-thirds of global aluminium output last year.
Aluminium was not traded in the rings, but was quoted at $2,730/2,731 a tonne, up from $2,714 at the close on Tuesday.
It earlier hit its highest level in two and a half years at $2,741 a tonne.
Zinc, also un-traded in rings, was quoted at $2,351/2,352 a tonne from $2,329, despite a large 26,550-tonne shipment into New Orleans.
LME stockpiles now stand at 812,100 tonnes, their highest level since 1995.
"Galvanised production is not doing too badly but zinc is a supply driven market and there is just too much out there," said Michael Widmer, analyst at BoA-Merrill Lynch.
Tin was untraded but bid at $32,850/32,900 from $32,400 while stainless steel material nickel changed hands at $26,050 from $25,300.
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