Copper soars

Copper rose to its highest level in more than two months on Thursday, boosted by the euro's strength against the dollar and a Spanish bond auction that drew strong demand, easing some immediate concerns about peripheral euro zone debt. Benchmark copper on the London Metal Exchange ended at $8,005 a tonne, up nearly 3 percent from a close of $7,785 on Wednesday.
The metal used in power and construction earlier hit its highest level since Oct. 31 at $8,074.50 a tonne, breaking above its 100-day moving average. Other metals in the complex also touched multi-month highs. Nickel hit a 2-1/2 month high, tin rose to its highest level in 1-1/2 months, aluminium hit a near 2-month high while zinc hit a one-month high.
"Previously there was a very bearish economic view being priced in so even a small improvement is having a very positive effect on prices, especially given the market was generally positioned on the short side," said Gayle Berry, analyst at Barclays Capital.
"But we're not out of the woods yet. Over the next couple of months, the markets are going to remain very sensitive to the big picture and I don't think this is the beginning of a straight line higher."
Spain's Treasury raised 10 billion euros from the auction of three bonds in the primary market, doubling a target of up to 5 billion euros, in a sale seen as a test of sentiment towards peripheral euro zone debt. Last year copper posted its first annual decline since 2008, losing a quarter of its value as the euro zone debt crisis and growth uncertainty soured the demand outlook for industrial metals.
The metal is traded predominantly on the London Metal Exchange, whose board received several serious potential bidders last year and will consider takeover proposals at a meeting in late February. Also helping copper, China's annual inflation fell to 4.1 percent in December, the lowest level in 15 months. If easier monetary policy seeps into end-user markets, it may help support prices for copper as buyers will have more liquidity.
Traders said an easing in Chinese inflation may help spur some domestic buying after the Lunar New Year break, as the government is now expected to focus less on putting a brake on prices and more on stimulus measures. Looking at inventories, data showed copper stocks in LME-registered warehouses fell by 6,000 tonnes, with 4,775 tonnes delivered out of warehouses in Busan, South Korea. Total cancelled warrants for copper stood at 13.74 percent.
"Inventory levels at the London Metal Exchange are falling and suggest robust consumption," Credit Suisse said in a note. In other metals, three-month nickel ended at $19, 700 a tonne from a close of $19,450 on Wednesday. It earlier rose to its highest level since late October at $19,950. Tin hit $21,100 a tonne, its highest level since late November, and closed at $21,070 from $20,475.
Zinc ended at $1,967 a tonne from $1,936, earlier rising to a one-month high at $1,985. Aluminium closed at $2,1 62 from Wednesday's close of $2,165 a tonne, having earlier hit a near two-month high at $2,197 a tonne. Most of China's large aluminium smelters have no plans to cut production like the world's top global producers of the metal, with firm domestic prices encouraging steady output in the first quarter of 2012, smelter sources and analysts said. Lead ended at $ 2,035 a tonne from Wednesday's close of $1,990.