LONDON: Copper surged on Wednesday to its highest in nearly two weeks as upbeat manufacturing data from the United States and the euro zone drove a wave of fund buying that reversed earlier weakness.
The metal has risen 18.2 percent so far in November, and is heading its biggest monthly gain in more than a decade on speculation that US President-elect Donald Trump's stated commitment to higher infrastructure spending could increase demand for raw materials.
Three-month copper on the London Metal Exchange closed 2.2 percent higher at $5,739 a tonne, off a session low of $5,562 a tonne. Earlier it reached its highest since Nov. 11 at $5,786. "We had manufacturing PMIs this morning from the euro zone, which were on the strong side, confirming this upward trend in global manufacturing that we've seen recently.
That's obviously good news for base metals," Danske Bank analyst Jens Pedersen said.
"The US manufacturing PMI was also slightly higher." "It's also noteworthy that prices are able to withstand this rise in the dollar," he said. "At the centre of this is the prospect of increased infrastructure spending in the US, but also this improvement in global manufacturing."
The dollar soared to a more than 13-year peak on Wednesday, bolstered by upbeat US economic data that showed the economy on track for steady growth.
New orders for US-manufactured capital goods rebounded in October, propelled by rising demand for machinery and a range of other equipment, all of which pointed to a tentative pickup in business investment.
The brightening economic outlook was further boosted by data showing a jump in consumer sentiment after Donald Trump won the race to the White House.
Copper, widely used in construction, leapt to its highest since June 2015 after the election. However, it failed to sustain a push above $6,000 a tonne.
Trump's plans for infrastructure spending, even if successful, would add only modestly to world demand. A paper on infrastructure plans ahead of the US election referred to potential outlays for bridges, airports and digital superhighways but did not mention specific projects.
"If Trump can implement only some of the infrastructure spending plans he announced during his election campaign, it would lead to higher demand for metals, but I don't think it is enough to change the global market," Commerzbank analyst Daniel Briesemann said.
Aluminium closed up 1 percent at $1,778 a tonne. Lead ended the day at $2,224 a tonne, up 1.5 percent, while zinc was 2.6 percent higher at $2,670.
Elsewhere, nickel closed up 2 percent at $11,600, while tin was up 0.9 percent at $21,245.
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