Copper set for biggest weekly gain since Feb on U.S.-China trade hopes

• China's currency surged to its strongest against the dollar since August, making dollar-priced metals cheaper for buyers the world's largest consumer.
• Zinc did not trade but was bid up 0.6pc at $2,276, lead was bid up 0.8pc at $1,953 and tin was bid 0.7pc lower at $17,125.
• Sentiment was also boosted by a pledge from senior officials in China, a major metals consumer.

LONDON: Copper was poised for its biggest weekly gain since February on Friday after the United States and China moved closer to a trade deal that could boost the global economy and demand for metals.

Washington has offered to suspend some tariffs on Chinese goods and cut others in exchange for Beijing buying more American farm goods, sources told Reuters, though China has yet to confirm its agreement to the truce.

Benchmark copper on the London Metal Exchange (LME) traded up 0.3pc at $6,176 a tonne in official rings after hitting $6,216, the highest since May.

The metal, used in power and construction, is up around 3pc this week and some 6pc from lows on Dec. 1. However, it is still down from highs above $7,000 before the trade dispute began last year.

A trade deal would alleviate concerns about economic growth, said Fawad Razaqzada, an analyst at FOREX.com. "Trade optimism is driving markets higher, lifting risk assets across the board," he said.

Sentiment was also boosted by a pledge from senior officials in China, a major metals consumer, to make economic policies more effective in 2020.

But weak supply-demand fundamentals and lacklustre global growth will soon reassert themselves, according to analysts at Commerzbank. "We expect to see lower metals prices for the most part next year," they said.

YUAN/DOLLAR: China's currency surged to its strongest against the dollar since August, making dollar-priced metals cheaper for buyers the world's largest consumer.

The euro and pound also strengthened.

MARKETS: Chinese stocks rallied sharply and global equities also gained, with an emphatic general election victory for Britain's Brexit-backing Conservative Party adding to the positive mood.

GERMANY: The economy faces another sluggish year despite a likely rebound in exports, the country's central bank said on Friday as it halved its growth forecast for 2020.

COPPER STOCKS: Headline inventories in LME-registered warehouses fell to 171,800 tonnes, the lowest since April 1.

ALUMINIUM SPREAD: The discount for cash aluminium versus the three-month contract expanded to $13.75 from a hefty premium at the start of the month, pointing to tighter nearby supply.

OTHER METALS: LME aluminium traded down 0.1pc at $1,774 a tonne and nickel traded 0.7pc higher at $14,195.

Zinc did not trade but was bid up 0.6pc at $2,276, lead was bid up 0.8pc at $1,953 and tin was bid 0.7pc lower at $17,125.

All were set for weekly gains.