LONDON: Copper rose on Wednesday as the euro strengthened against the dollar after data showed an uptick in US, Chinese and German manufacturing, although crumbling demand in Europe restrained economies in Asia.
Benchmark copper on the London Metal Exchange closed at $8,440 percent against Tuesday's close of $8,320, having hit 4-month highs of $8,679.50 a tonne on Friday.
Copper posted gains of 9.5 percent in January.
The pace of growth in the US manufacturing sector rose in January to its highest level in seven months, though a measure of employment faded and private-sector employers added fewer jobs than expected, data showed on Wednesday.
And an unexpected expansion in China's powerful factories in January and the first growth in German manufacturing in four months underpinned a rally that lifted equity markets in Europe and gave US markets an early boost.
"The manufacturing data was a touch better than in December; this is the key reason propping up metals," said VTB Capital analyst Andrey Kryuchenkov. "I expect the $8,300-8,600 range to hold though, as copper consolidates below recent highs."
The euro rose to a session high against the dollar, also helped by renewed optimism that Greece will reach a deal with its creditors. A weaker dollar makes copper prices cheaper for holders of other currencies.
Greek Finance Minister Evangelos Venizelos said talks with private creditors on a bond swap deal that is key to the country avoiding an unruly default were "one formal step away."
FUNDAMENTALS SUPPORT
Fundamentals also supported copper prices.
Inventories of copper in LME-monitored warehouses continued to fall, according to latest data, and hit their lowest since 18 Sept. 2009.
The falling copper inventories in LME warehouses in the United States could signal an improvement in industrial demand, but traders seeing little appetite from top consumer China queried the bullish credentials of the indicator.
Copper prices are also likely to gain support from a looming strike by workers of one union at Teck Resources Ltd's Chilean Quebrada Blanca mine, which produced 86,200 tonnes of copper in 2010. The workers have ratified strike action after contract negotiations with the firm broke down, a union leader said late on Tuesday.
A labour stoppage at Quebrada Blanca would come on the heels of a wave of mine strikes last year which battered output in top copper producer Chile.
"While this year could see a pick-up in global production, copper mine supply remains vulnerable to disruptions," Credit Suisse said in a research note.
BHP Billiton will cut staff and reduce mine activity at its Nickel West unit in Australia in response to weak prices and the impact of a strong Australian dollar, the company said on Wednesday.
Overall nickel production was unlikely to change since the company will draw on existing stockpiles of nickel concentrate to make up for the shortfall while operating at the reduced level, a spokeswoman said
Nickel closed at $20,975 from $20,855 at Tuesday's close.
Tin closed at $24,155 from $24,345, zinc at $2,131 from $2,106, lead at $2,235 from $2,213 and aluminium at $2,265 from $2,239.
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